Oil prices up 1% on big US storage withdrawal, tanker attack in Red Sea
Add BT as a preferred source
DeeperDive is a beta AI feature. Refer to full articles for the facts.
OIL prices edged up about 1 per cent on Wednesday from a five-month low in the prior session on a bigger-than-expected weekly withdrawal from US crude storage and on worries about the security of Middle East oil supplies after a tanker attack in the Red Sea.
Traders also noted crude prices held gains after the US Federal Reserve released a statement that it would hold interest rates steady as expected and signaled it would start lowering borrowing costs in 2024.
Lower interest rates cut consumer borrowing costs, which can boost economic growth and demand for oil.
Brent futures rose US$1.02, or 1.4 per cent, to settle at US$74.26 a barrel. US West Texas Intermediate (WTI) crude rose 86 cents, or 1.3 per cent, to settle at US$69.47.
A tanker in the Red Sea off Yemen’s coast was fired on by gunmen in a speedboat and targeted with missiles, the latest incident to threaten the shipping lane after Yemeni Houthi forces warned ships not to travel to Israel.
The US Energy Information Administration (EIA) said energy firms pulled a bigger than expected 4.3 million barrels of crude from stockpiles during the week ended Dec 8 as imports fell.
Navigate Asia in
a new global order
Get the insights delivered to your inbox.
“This (EIA) report is definitely more supportive than the (API) report that we saw yesterday,” said Phil Flynn, an analyst at Price Futures Group, referring to the “larger than expected drawdown in crude oil supplies” in the EIA report.
On Tuesday, both Brent and WTI futures fell to their lowest since June and were in contango, with prices in later months higher than earlier months. Traders say this is bearish because it can encourage marketers to buy oil at current prices and store it to sell later when prices are higher.
US interest rates
The US Fed said it held interest rates steady and signaled an end to monetary policy tightening to fight inflation and lower borrowing costs coming in 2024.
Elsewhere, nearly 200 nations reached an historic deal at the COP28 conference to begin reducing global consumption of fossil fuels.
Saudi Arabia’s energy minister said he was in agreement with the COP28 presidency on the final deal, adding it would not affect the kingdom’s hydrocarbon exports.
In its monthly report, the Organization of the Petroleum Exporting Countries (Opec) blamed the latest crude price slide on “exaggerated concerns” about oil demand growth.
Brent futures have dropped about 10 per cent since Opec+ announced a new round of production cuts on Nov 30. Opec+ includes Opec and allies like Russia. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
