July 25, 2024
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Oil Price Rises Amid Red Sea Attack, US Rate Cuts

Oil prices regained some ground in Asian trade on Wednesday amid concerns over attacks on shipping in the Red Sea and growing expectations that cuts to U.S. interest rates will take longer than thought.

Brent crude futures rose 24 cents or 0.3% to $82.58 a barrel by 0721 GMT, while U.S. West Texas Intermediate crude futures (WTI) were up 21 cents or 0.3% at $77.25.

The Brent and WTI contracts fell 1.5% and 1.4%, respectively, after near three-week highs on Tuesday as the premium for prompt U.S. crude futures to the second-month contract more than doubled to $1.71 a barrel – its widest level in roughly four months.

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This gives energy companies a chance to sell now that to store for future months. The premiums slid to 4 cents a barrel on Wednesday.

Founder of oil market analysis provider Vandana Hari, said that “Crude futures prices have become relatively range-bound, and have at least $6-7 per barrel of risk premium embedded at current levels.”

She said prices could remain range-bound until the next turning point in the Gaza crisis, whether that be a de-escalation through a ceasefire or an exacerbation by Israel’s onslaught in Rafah.

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