Oil edges down as investors watch Red Sea developments

Oil prices slipped on Wednesday, eating into the previous day’s gains as investors monitored developments in the Red Sea, where shippers are returning despite further attacks on Tuesday.

Brent crude futures were down 54 cents, or 0.6%, at $80.53 a barrel by 1445 GMT. U.S. West Texas Intermediate crude fell 65 cents, or 0.8%, to $74.92.

Danish shipping company Maersk said it has scheduled several dozen container vessels to travel via the Suez Canal and Red Sea in the coming weeks after calling a temporary halt to those routes this month after attacks by Yemen’s Iran-backed Houthi militia.

France’s CMA CGM also said it was resuming passage through the Red Sea after deployment of a multinational task force to the region.

“I think we have to wait and see whether the increased naval patrols and rerouting of ships lead to a decline in attacks,” said Callum Macpherson, head of commodities at Investec.

Both the Brent and WTI benchmarks settled more than 2% higher in the previous session as the latest attacks on ships in the Red Sea prompted fears of shipping disruption.
The prospect of a prolonged Israeli military campaign in Gaza also remains a major driver of market sentiment. Israeli forces pummelled central Gaza by land, sea and air on Wednesday after Israel’s Chief of Staff Herzi Halevi told reporters on Tuesday that the Gaza war would go on “for many months”.

Elsewhere, oil loadings at the Russian Black Sea port of Novorossiisk were suspended because of a storm. However, the Caspian Pipeline Consortium (CPC) terminal near the port was open, Kazakhstan’s energy ministry said.

U.S. crude stocks were expected to have fallen by 2.6 million barrels last week, while distillate and gasoline inventories were expected to have risen, a preliminary Reuters poll showed on Tuesday.

Inventory reports from the American Petroleum Institute and the Energy Information Administration are expected on Wednesday and Thursday respectively, a day later than normal because of the Christmas holiday.