December 27, 2023 (MLN): Oil prices held steady in early Wednesday session amid escalating conflicts in the Middle East, with a new attack on vessel MSC United VIII which was en route to Pakistan from Saudi Arabia.
Brent crude is currently trading at $80.98 per barrel, down by 0.11% on the day, after rising 2.5% on Tuesday.
While West Texas Intermediate crude (WTI) is trading at $75.41 per barrel, down by 0.21% on the day.
The vessel MSC United VIII was attacked despite the US and a number of other nations forming a maritime task force to deter strikes, as Bloomberg reported.
The latest attack by the Yemen-based Houthi militants, together with US strikes on targets in Iraq, are further signs that the Israel-Hamas war still risks expanding into a wider conflict that could destabilize the Middle East.
Hamas is designated a terrorist organization by the US and the European Union.
“Persistent conflict in the Red Sea is propelling a rally,” said Priyanka Sachdeva, senior market analyst at brokerage Phillip Nova Pte. “Thin market depth — owing to the holiday season — is adding further to complexities.”
Oil remains on course for the first annual decline since 2020, although the tensions have helped prices to rebound from lows hit earlier this month.
There are widespread concerns about a glut next year despite fresh supply curbs from the Organization of Petroleum Exporting Countries and its allies.
Timespreads, meanwhile, have strengthened in recent sessions, with the gap between Brent’s nearest two contracts at 19 cents a barrel in backwardation compared with 4 cents a week ago.
The sessions between Christmas and New Year are also likely to see lower volumes, with many traders away.
Other signals are less positive. Both crude benchmarks are facing a so-called death cross, with the 50-day moving average below the 200-day counterpart, Bloomberg added.
Some traders see that pattern as heralding further weakness.
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Posted on: 2023-12-27T10:11:12+05:00
