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China's Reported Efforts To Stem Houthi Attacks Help Trim Oil's Weekly Advance

OIL

In the first part of Friday trade front end benchmarks for oil are tracking moderately softer. Brent is just under $82.10/bbl, off around 0.40%/ WTI is under $77/bbl, off by around 0.6% at this stage. This is reversing part of Thursday's ~3% gains for the benchmarks. We are comfortably higher for the week though, with WTI up ~4.75%, Brent +4.5%.

  • A Reuters piece crossed in earlier trade, with reports that the China authorities have asked Iran to curb Houthi attacks on Red Sea, with the news wire reporting that if China's interests are harmed it could impact commercial relations with Iran.
  • This has likely weighed on sentiment at the margins. Equity risk off, albeit in the tech space, has likely been another headwind.
  • Still, broader concerns around supply through the Red Sea, coupled with Ukrainian drone strikes on Russia energy infrastructure, have added geopolitical risk premiums to prices in recent sessions. Lower US stocks has been another support point.
  • In terms of upside targets, $84.22 (Nov 30 high) is in focus for Brent, while for WTI, $77.48 (Fibo retrace of Sep 19 – Dec 13 bear leg) after which lies $79.56 (Nov 30 high) are areas to watch.

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