Oil futures fell early Thursday as traders put worries over the potential for shipping disruptions in the Red Sea on the back burner, while failing to get a lift from data showing a drop in U.S. crude inventories last week.
Price action
-
West Texas Intermediate crude
CL00,
-2.44%
for February delivery
CL.1,
-2.44% CLG24,
-2.44%
fell 84 cents, or 1.1%, to $73.27 a barrel on the New York Mercantile Exchange. -
February Brent crude
BRNG24,
-1.46% ,
the global benchmark, was down 98 cents, or 1.2%, at $78.67 a barrel on ICE Futures Europe. -
Back on Nymex, January gasoline
RBF24,
-1.99%
fell 0.7% to $2.148 a gallon, while January heating oil
HOF24,
-1.86%
was off 0.4% at $2.614 a gallon. -
February natural gas
NGG24,
+4.72%
jumped 3.9% to $2.532 per million British thermal units.
Market drivers
Shipping company Maersk
MAERSK.A,
MAERSK.B,
on Wednesday said it had scheduled several dozen container ships to move via the Suez Canal and Red Sea in the coming days and weeks, news reports said. Maersk and other shippers had previously rerouted ships away from the area after a series of drone and missile attacks by Iranian-backed Houthi rebels in Yemen following the start of the Israel-Hamas war.
The U.S. last week announced the formation of a naval alliance to thwart the attacks, which had raised concerns about potential disruptions to oil shipments from the Middle East.
“Oil prices fell as global shipping giants prepared to resume navigation through the Red Sea despite ongoing missile attacks from Houthi rebels,” Stephen Innes, managing partner at SPI Asset Management, said in a note. “The decision to resume operations reflects a calculated risk, betting on the success of a new multinational maritime task force, Prosperity Guardian, commissioned to safeguard the region.”
Renewed threats to Red Sea shipping lanes could reverse the selling seen over the last 24 hours, said Phil Flynn, analyst at Price Futures Group, in a Thursday note.
“Technically the market closed poorly (on Wednesday), after closing strong the day before,” he wrote. “To reverse the downside momentum, we would like to see oil close above $79.36 today. A close below $73.00 today technically would look very bearish. Of course, you can always expect the unexpected on light holiday volume.”
Oil failed to get a sustained lift after the Energy Information Administration said U.S. crude inventories fell 6.9 million barrels in the week ending Dec. 22. Gasoline inventories declined by 600,000 barrels, with distillate stocks up by 800,000 barrels.
Analysts surveyed by S&P Global Commodity Insight, on average, had expected a 3.5 million-barrel drop in crude inventories for the week ending Dec. 22. Gasoline supplies were seen rising 710,000 barrels, with distillates down 50,000 barrels.
The American Petroleum Institute late Wednesday reported that U.S. crude inventories rose 1.8 million barrels last week, according to a source citing the data.
The EIA also reported that natural gas in storage declined by 87 billion cubic feet in the week ending Dec. 22. Analysts surveyed by S&P Global Commodity Insights had forecast a withdrawal of 78 billion cubic feet.
Natural-gas futures were lifted after NOAA’s 8-to-14-day temperature outlook said below-average temperatures are expected for the southern half of the lower 48 states through Jan. 10, which should provide some strength to heating demand, Victoria Dircksen, commodity analyst at Schneider Electric, said in a note.
