Oil Drops 3% as Red Sea Shipping Fears Ease

Oil prices fell 3% Thursday at settlement as more shipping companies announced their readiness to sail in the Red Sea, reducing fears of supply disruptions.

Brent crude futures for March delivery fell $2.39 to $77.15 a barrel upon settlement, while February futures contracts, which expired on Thursday after settlement, fell 1.3% to $78.39 a barrel.

West Texas Intermediate (WTI) futures also fell by $2.34, or about 3.2% to $71.77 per barrel.

Yesterday, oil prices fell about 2% as major shipping companies began returning to the Red Sea route.

Danish shipping giant "Maersk" showed on Thursday that the company will direct almost all container ships sailing between Asia and Europe through the Suez Canal from now on, while diverting only a small number to the Cape of Good Hope route.

The US Energy Information Administration reported a larger-than-expected draw in US crude oil inventories last week, which limited the decline in prices for a period.

Earlier this week, French shipping group CMA CGM said it intends to increase the number of its ships crossing the Suez Canal.

Administration data showed that crude oil inventories fell by 7.1 million barrels in the week ending December 22, compared to analysts’ expectations in a Reuters poll of a decline of 2.7 million barrels. 

Investors expect interest rates in Europe and the United States to be lowered in 2024, which may boost the volume of demand for oil.