Oil prices stabilized on Wednesday after strong gains on Tuesday as investors monitor developments in the Red Sea, with some major shipping companies resuming transit from the region despite the continued attacks and broader tension in the Middle East.
Brent crude futures rose 15 cents, or 0.2 percent, to $81.22 per barrel by 07:30 GMT, while US West Texas Intermediate crude fell eight cents, or 0.1 percent, to $75.49 per barrel.
The two benchmarks ended the session on Tuesday with an increase of more than two percent, as attacks on ships in the Red Sea fueled fears of disruption to shipping operations, in addition to the impact of growing hopes for lowering interest rates in the United States, which may boost economic growth and increase demand for fuel.
Despite continued attacks by the Yemeni Houthi group allied with Iran, major shipping companies such as Denmark's Maersk and France's CMA CGM have resumed transit through the Red Sea after deploying a multinational task force in the region.
Priyanka Sachdeva, chief market analyst at Philip Nova, said despite the closure of shipping channels and the rerouting of ships, the extent to which global supplies will be affected is still a matter of debate.
The German company Hapag-Lloyd is expected to announce its decision regarding the resumption of traffic in the region on Wednesday.
The possibility of the Israeli military campaign in the Gaza Strip continuing for a long period remains one of the main drivers of market sentiment.
Israeli Chief of Staff Herzi Halevy told reporters on Tuesday that the war in Gaza will continue for several months.
Oil prices also received support from speculation that the Federal Reserve (US Central) will begin lowering interest rates in 2024.
Lower interest rates reduce borrowing costs, which can stimulate economic growth and increase demand for oil.
A preliminary poll conducted by Reuters on Tuesday showed that US crude inventories are expected to fall by 2.6 million barrels last week, while distillate and gasoline inventories are likely to rise.
Inventory reports from the American Petroleum Institute and the Energy Information Administration are expected on Wednesday and Thursday, respectively, a day later than usual for both reports due to the Christmas holiday.
