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Oil prices slip as Red Sea supply worries ease, U.S. inventories rise

Published 12/28/2023, 09:01 AM
Updated 12/28/2023, 09:01 AM
© Reuters. -- Oil prices retreated Thursday as concerns surrounding supply disruptions through the crucial Red Sea region eased, while U.S. crude stockpiles continued to grow.

By 09:00 ET (14.00 GMT), the U.S. crude futures traded 0.6% lower at $73.67 a barrel and the Brent contract dropped 0.6% to $79.05 a barrel.

Maersk returns to the Red Sea

Many shipping companies stopped using Red Sea routes earlier this month after Yemen's Houthi militant group began targeting vessels, disrupting global trade and adding a risk premium to the crude market.

Although Germany's Hapag-Lloyd said on Wednesday that it considered the route still too dangerous, shipping giant Maersk will sail almost all container vessels travelling between Asia and Europe through the Suez Canal, according to the group's schedule.

That said, tensions remain elevated in the region as Israel has escalated its ground war in Gaza sharply, indicating that the war would last for months.

U.S. inventories grow again 

Also weighing on the market was data from the American Petroleum Institute industry group on Wednesday showing U.S. crude stocks rose 1.84 million barrels in the week ended Dec. 22.

Official numbers from the Energy Information Administration are due later Thursday, a day later than usual following the Christmas holiday, after having risen by 2.9 million barrels the prior week as U.S. crude output rose to a record 13.3 million barrels per day.

A series of builds in U.S inventories over the past few weeks have rattled oil markets, especially as rising gasoline and distillate stockpiles pointed to cooling fuel demand in the largest consumer in the world.

Oil set for 2023 losses

Brent and WTI benchmark contracts are still set to lose around over 8% each in 2023. 

Concerns over top importer China - as an economic rebound failed to materialize - were a major weight on prices, as were fears of a slowdown in global crude demand due to high interest rates to combat inflation impacting economic activity.


Latest comments

There goes the credibility again. 6.9 million bbl draw. The API and EIA must be counting different things.
Oil traders are smelling recession in 2024.
Pure manipulation!🤣
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