Oil rallied, reversing earlier declines, after another merchant ship was struck near Yemen.
West Texas Intermediate rose 0.4% to approach $78 a barrel on Friday, after earlier dropping as much as 1.7%. Crude already was on pace for its biggest weekly gain since the start of the Israel-Hamas war amid positive fundamental news and a push from trading algorithms.
The ship was on fire after being struck when it was about 55 miles southeast of Aden, Yemen, maritime intelligence firm Ambrey Analytics said. The precise details of the incident weren’t clear, the firm said in a notice.
Crude’s advance has been underpinned by elevated tensions in the Middle East, with the US striking Iran-backed Houthi rebels in Yemen to force them to halt attacks on commercial shipping in the Red Sea. Elsewhere, drone attacks on refineries in Russia endangered crude flows as the war in Ukraine drags on.
Oil has gained more than 8% in January, with additional support from an unexpectedly large drawdown in US inventories and efforts by Chinese policymakers to shore up the economy. Still, many traders remain cautious given prospects for robust supplies from non-OPEC producers, as well as slower demand growth in major importers, including India.
There’s been a marked widening in some of crude’s closely watched timespreads, signaling tighter conditions. Brent’s three-month spread has gapped out to about $1.25 a barrel in backwardation, a bullish pattern. That’s up from a differential of just 16 cents a barrel at the start of the month. –(Bloomberg)
