HOUSTON: Oil prices closed the first trading session of 2024 lower as expectations for interest rate cuts waned and on easing concerns that tensions in the Red Sea will disrupt supplies.
Brent crude settled at US$75.89 (RM349.07), down by US$1.15 or 1.5%. US West Texas Intermediate crude settled at US$70.38 (RM323.73) a barrel, down by US$1.27 or 1.8%.
Prices fell as investors tempered expectations about interest-rate cuts in 2024. Lower interest rates reduce consumer borrowing costs, which can boost economic growth and oil demand.
The dollar also strengthened on Tuesday, while stock prices slipped, further pressuring oil lower. A stronger dollar makes oil more expensive for investors holding other currencies.
Oil prices had climbed around US$2 in earlier trading following attacks on vessels in the Red Sea by Houthi rebels over the weekend, and the reported arrival of an Iranian warship on Monday.
“The market is correcting itself in so far as there have been no supply disruptions and they think it is unlikely that the Iranian warship will engage with American warships,” said Andrew Lipow, president of Lipow Oil Associates.
“Clearly, the oil market will move higher if shots are fired,” he added.
A wider conflict could close crucial waterways for oil transport.
A Reuters survey of economists and analysts predicted Brent crude would average US$82.56 a barrel this year, up slightly from the 2023 average of US$82.17, with weak global growth expected to cap demand. Geopolitical tensions, however, could support prices.
In China, investor expectations of economic stimulus measures rose after manufacturing activity shrank in December for a third month, government data showed on Sunday.
Any such stimulus could boost oil demand and support crude prices.
Separately, Opec+ plans to hold a meeting of its Joint Ministerial Monitoring Committee in early February, though an exact date has not been decided, three sources from the alliance said. – Reuters