Red Sea oil concerns continue

Oil fell from a one-month high on weak trading and weak technicals. Oil prices retreated from their highest close in almost a month as key technicals weakened due to holiday trading. U.S. crude fell 1.9% to settle around $74 a barrel after closing at its strongest since November the previous session. Investors focused on balancing their positions ahead of the new year, a move that has kept prices in check, while low volumes have exacerbated downside. Supply risks from Yemen-based Houthi militants have not eased despite the easing of tensions in the Red Sea; shipping giant Hapag-Lloyd AG said it would stay away from the region despite the launch of a U.S.-led task force to protect the key trade route. Even so, oil is on course for its first annual decline since 2020. There are widespread concerns about a glut next year despite new supply curbs from the Commonwealth of Petroleum Exporting Countries and its allies. “As we get closer to year-end, unless we see further attacks in the Red Sea region, a lot of the trading will be focused on realigning positions on weak volume,” said Dennis Kissler, senior vice president of trading at BOK Financial Securities.