Brent declines as API reports US crude stock build

The front-month ICE Brent contract lost $1.88/bbl on the day, to trade at $79.32/bbl at 09.00 GMT.

PHOTO: Oil barrels and the US Dollar. Getty Images

Upward pressure:

Mounting concerns in the Red Sea shipping route have provided an upward thrust to Brent futures this week.

“The Houthi rebels still control the west of Yemen, including its Red Sea coast, and will continue to launch attacks,” said Price Futures Group’s senior market analyst Phil Flynn.

Moreover, the likelihood of the Israel Defense Forces (IDF) extending military operations in Gaza is also sparking supply concerns in the Middle East and influencing the oil market’s sentiment.

“Oil supply and transportation risks are rising just as the world is on the cusp of a global supply deficit,” Flynn added.

The IDF yesterday launched drone attacks and airstrikes on Central Gaza, following a statement by Israeli chief of staff Herzi Halevi that the conflict would persist "for many months."

Downward pressure:

Brent futures shed the previous day’s gains after the American Petroleum Institute (API) reported a 1.84 million bbls rise in commercial US crude inventories in the week ended 22 December.

Oil market analysts expected the US crude inventories to decline by 2.7 million bbls in the week, Reuters reported.

Meanwhile, Brent futures felt additional downward pressure after some container shipping giants announced plans to gradually resume shipping operations through the Red Sea, despite ongoing airstrikes by Iran-aligned Houthi militants.

“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,” said SPI Asset Management’s managing partner Stephen Innes.

By Aparupa Mazumder

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