Oil edges lower as investors watch for Red Sea developments

Oil edges lower as buyers watch for Red Sea developments

LONDON, Dec 27 (Reuters) – Oil prices fell slightly on Wednesday, eating into the previous day’s gains as investors watched developments in the Red Sea.

Brent oil futures were down 53 cents, or 0.65%, at $80.54 a barrel by 1141 GMT. U.S. West Texas Intermediate oil lost 62 cents, or 0.82%, to $74.95.

Prices could be down on the day on Wednesday because of investor profit-taking after a strong rally on Tuesday, said UBS expert Giovanni Staunovo.

Both benchmarks ended more than 2% higher in the previous session as fresh attacks on ships in the Red Sea prompted fears of shipping disruption, with further price support from hopes of U.S. interest rate cuts that could boost economic growth and fuel demand.

Despite the attacks by Yemen’s Iran-backed Houthi militia, big shipping companies such as Maersk (MAERSKb.CO) and France’s CMA CGM were resuming passage through the Red Sea after the deployment of a multinational task force to the area.

The prospect of a prolonged Israeli military campaign in Gaza also remains a big driver of market sentiment.

Israeli troops pummelled central Gaza by land, sea and air on Wednesday after Israel’s Chief of Staff Herzi Halevi told reporters on Tuesday that the Gaza war would go on “for many months”.

Elsewhere, oil loadings at the Russian Black Sea port of Novorossiisk were stopped because of a storm on Wednesday, sources told .

But crude exports from the Caspian Pipeline Consortium (CPC) terminal near the port have already restarted, Kazakhstan’s energy ministry said.

U.S. crude stocks were expected to have fallen by 2.6 million barrels last week while distillate and gasoline supplies were likely expected to have risen, a preliminary Reuters poll showed on Tuesday.

Inventory reports from the American Petroleum Institute and the Energy Information Administration are due on Wednesday and Thursday respectively, a day later than normal for both reports because of the Christmas holiday.

Reporting by Robert Harvey in London and Jeslyn Lerh in Singapore Additional reporting by Andrew Hayley in Beijing Editing by David Goodman

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