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(Bloomberg) — Oil prices edged lower as traders weighed broader risks from dwindling U.S. inventories and further attacks on ships in the Red Sea in a volatile session.
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Brent edged back to nearly $77 a barrel after Tuesday’s nearly 2% rally, reversing earlier gains. U.S. inventories fell by 5.2 million barrels last week, according to the American Petroleum Institute, and Cushing inventories also fell. Meanwhile, the Energy Information Administration expects the global supply shortage to narrow.
Iranian-backed Houthi rebels launched further attacks on commercial ships in the Red Sea, but no injuries or damage were reported. The incidents, which continue despite the deployment of US-led naval forces, are seen as a spillover from the Israel-Hamas war.
Oil prices have been on a seesaw this month, rising and falling every other day as traders try to assess the outlook for the next few quarters. In recent days, purchases of Middle Eastern crude oil have increased due to soaring freight rates, and the market continues to be supported by OPEC+ supply cuts, tensions in the Middle East region including the Red Sea, and supply disruptions in Libya.
Amrita Sen, co-founder of consultancy Energy Aspects, told the Gulf Intelligence Global Energy Outlook Forum: “I don’t think the economy is going to get any worse, but I do think the risk appetite is gone.” It’s a big deal,” he said. “But we are looking at major refinery maintenance, so why prolong it now?”
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