International oil prices fell sharply on Thursday (December 28th), with the settlement prices of the US and Brent oil both falling by about 3%.
As of the close, the settlement price of WTI crude oil futures for February 2024 delivery in the United States fell by $2.34, a decrease of 3.16%, to $71.77 per barrel; The settlement price of Brent crude oil in March fell 2.98% to $77.21, both recording their lowest prices since December 19th.
Analysis suggests that an increasing number of shipping companies are preparing to return to the Red Sea route, easing concerns about supply disruptions caused by previous tensions in the Middle East.
Since mid month, the Yemeni Houthi armed forces have expanded their range of attacks on Israeli targets, starting to strike "ships related to Israel" in the Red Sea, and continuously escalating related threats, resulting in multiple cargo ships being attacked in nearby waters. Several shipping companies have announced that they have diverted to avoid this route.
The Suez Canal is located north of the Red Sea, connecting the Mediterranean Sea and is the fastest sea route between Asia and Europe. Approximately 15% of global sea trade passes through it, including nearly 30% of container trade. The International Chamber of Shipping has warned that detours will increase navigation costs, increase shipping days, and correspondingly delay delivery times.
However, shipping giant Maersk announced yesterday that it has arranged for dozens of its cargo ships to return to the Red Sea in the coming days. The Maersk timetable released by domestic media also shows that almost all container ships traveling between Asia and Europe will sail through the Suez Canal, with only a few ships taking a detour from the Cape of Good Hope in Africa.
On Tuesday, France's Daffy Shipping Group also announced that it will increase the number of ships passing through the Red Sea. Price Futures Group analyst Phil Flynn said that traders believe that the Red Sea route is reopening and will provide oil supply to the market faster.
Within the day, data released by the US Energy Information Agency (EIA) showed that US commercial crude oil inventories decreased by 7.114 million barrels in the week ending December 22, a decrease greater than the market's previous expectation of 2.704 million barrels. But the crucial crude oil inventory in the Kuxin region continued to rebound, increasing by 1.508 million barrels, suppressing oil prices.
Recently, the main delivery location for WTI crude oil futures, the inventory in the Cushing region, has been the focus of the EIA report. Dennis Kissler, Senior Vice President of BOK Financial, stated that Cushing's stock, combined with mild winters, has kept oil prices low.
Kissler added that Thursday's market volatility was mainly due to weak holiday trading volume and technical selling triggered by oil prices breaking through the moving average indicator.