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Oil prices stable as economic headwinds offset Red Sea disruptions
Global Banking & Finance Review®
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By Georgina McCartney
HOUSTON (Reuters) -Oil prices were little changed in the first session of the new year, as the impact of economic headwinds unravelled gains from potential disruptions to supply due to tensions in the Red Sea.
Brent crude was down 6 cents, or 0.1%, to $76.98 a barrel at 15:52 GMT. U.S. West Texas Intermediate crude was down 11 cents, or 0.2%, at $71.54, after both benchmarks gained around $2 in earlier trading.
“Oil markets got an initial lift-off of the attacks in the Red Sea but we have trouble sustaining those gains,” Tim Evans, an independent oil analyst, said.
U.S. helicopters on Sunday repelled an attack by Iran-backed Houthi forces on a container vessel operated by Danish shipper Maersk in the Red Sea. An Iranian warship had entered the Red Sea on Monday, according to the semi-official Tasnim news agency.
Maersk said it would decide on Tuesday whether to resume sending vessels through the Suez Canal via the Red Sea or redirect them around Africa after the attack, a company spokesperson said.
A wider conflict could close crucial waterways for oil transportation.
Meanwhile, traders tempered expectations around interest-rate cuts this year, holding back oil price gains. A stronger dollar also weighed on prices.
A Reuters survey of economists and analysts predicted that Brent crude would average $82.56 a barrel this year, up slightly from the 2023 average of $82.17, with weak global growth expected to cap demand. Geopolitical tensions, however, could provide price support.
In China, investor expectations of economic stimulus measures rose after manufacturing activity shrank for a third month in December, government data showed on Sunday.
Any such stimulus could boost oil demand and support crude prices.
(Reporting by Georgina McCartney and Noah BrowningAdditional reporting by Florence Tan and Sudarshan VaradhanEditing by David Goodman, Mark Potter and Barbara Lewis)
Brent crude is a major trading classification of crude oil originating from the North Sea. It serves as a benchmark for pricing oil worldwide and is used to set prices for two-thirds of the world's oil.
West Texas Intermediate (WTI) is a grade of crude oil used as a benchmark in oil pricing. It is sourced from the U.S. and is known for its high quality and low sulfur content.
A stronger dollar means that the U.S. dollar has increased in value compared to other currencies. This can affect international trade, making U.S. exports more expensive and imports cheaper.
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