Oil prices were mixed in Wednesday’s early trade as investors weighed the supply risks from Houthi attacks in the Red Sea, given the resumption of commercial transit, while Israel vowed to step up aggression in Gaza.
The international benchmark crude Brent traded at $80.94 per barrel at 0659 GMT, a 0.11% increase from the closing price of $80.85 a barrel in the previous trading session on Tuesday.
The American benchmark, West Texas Intermediate (WTI), traded at the same time at $75.44 per barrel, down 0.17% from Tuesday’s close of $75.57 per barrel.
Both benchmarks saw much fluctuation in early Asian trade as markets assessed the security risks of the Red Sea trading route amid escalating tension in the region.
The Houthi group has repeatedly threatened to target ships owned or operated by Israeli companies “in solidarity with Palestine” and has urged countries to withdraw their citizens working within the crews of these ships.
The group’s attacks are in response to Israel’s relentless air and ground attacks on the Gaza Strip.
On Dec. 23, the US Central Command (CENTCOM) said in an X post that Yemen’s Houthi rebels launched two missiles in the direction of the Red Sea.
The US military said Tuesday that it shot down 12 drones, three anti-ship ballistic missiles and two land-attack cruise missiles fired by Yemen’s Iran-backed Houthi rebels at ships in the southern Red Sea.
Meanwhile, some shipping companies, including Maersk, France’s CMA CGM and Germany’s Hapag-Lloyd, said they are considering resuming their shipments despite the attacks.
-Rate cut expectations lifting market sentiment
Expectations of US Fed interest rate cuts starting in May next year have helped prices rise, and the likelihood of a “soft landing” is getting stronger.
Although it is clear from the markets that the US Fed will leave interest rates unchanged at the first meeting of next year, the probability of the bank starting interest rate cuts in March rose to 85%.
The Core Personal Consumption Expenditure (PCE) Price Index, which excludes food and energy items that the Fed considers inflation indicators, came in at its lowest since April 2021, raising hopes of an economic rebound.
Analysts rate the slowdown in the PCE Index, the Fed’s inflation indicator, as a signal of endurance in the downward inflationary trend.