2023-12-26T04:22:46+00:00
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/ Oil prices stabilized after recording the largest weekly increase in more than two months, with a focus on shipping disruptions in the Red Sea after a series of Houthi attacks on ships in the vital waterway.
Suez Canal, with fluctuations in oil prices”>Brent crude oil was trading above $79 a barrel after rising more than 3% last week, the largest rise since October. The price of US West Texas Intermediate crude was close to $74 per barrel.
The ships were forced to change course after the strikes, prompting the formation of a multinational naval task force to help protect merchant ships.
Container giant AP Moller-Maersk A/S now says it is preparing to resume use of the route that links to the Suez Canal.
The recent gains achieved by crude oil helped reduce the quarterly decline, as oil is still on track to lose about 8% this year. Traders are concerned that despite pledges by the Organization of the Petroleum Exporting Countries (OPEC) and its allies to further cuts in production, global crude supplies may outstrip demand next year.
Angola withdrew from the producer group, amid disagreements over quotas, but the remaining members were quick to reaffirm the unity of the alliance.
Price differences between oil contracts have strengthened during recent sessions. Among them, Brent crude’s spot spread – the difference between its two nearest contracts – swung to 21 cents per barrel in “backorder”, a near-term bullish pricing pattern, versus 16 cents per barrel in “contango” a week ago.
Meanwhile, oil processing operations in Russia last week remained close to the highest daily level in more than eight months amid a decline in seaborne exports. Last week, the United States announced new measures to implement price caps – including sanctions on the mysterious Russian oil trader, represented by the energy company Bellatrix – to pressure Moscow over its ongoing war in Ukraine.
The current week is likely to witness weak liquidity, in light of the Christmas and New Year holidays, with the total outstanding oil derivatives contracts declining since approximately the middle of this month. Oil’s implied volatility has also declined in recent weeks.