NEW DELHI- 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 US interest rates will take longer than thought.
Brent crude futures rose 30 cents or 0.36 percent to $82.64 a barrel, while US West Texas Intermediate crude futures (WTI) were up 26 cents or 0.34 percent at $77.3.
The Brent and WTI contracts fell 1.5 percent and 1.4 percent respectively from near three-week highs on Tuesday as the premium for prompt US crude futures to the second-month contract more than doubled to $1.71 a barrel – its widest level in roughly four months.
That encourages energy companies to sell now rather than paying to store product for future months. The premiums slid to 4 cents a barrel on Wednesday.
“Crude futures prices have become relatively range-bound, and have at least $6-7 per barrel of risk premium embedded at current levels,” said Vandana Hari, founder of oil market analysis provider Vanda Insights.
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.
Attacks in support of the Palestinians on vessels in the Red Sea and Bab al-Mandab strait by Yemen’s Iran-aligned Houthis have continued to stoke concerns over freight flows through the critical waterway. Drone and missile strikes have hit at least four vessels since Friday.