Crude Higher As Red Sea Conflict Shows No Signs Of Abating

Oil is moderately higher during APAC trading today helped by another round of US strikes on Houthi positions, a lower greenback (USD index -0.1%) and more mixed risk sentiment. WTI is off its intraday low of $72.65 to be approaching $73 and is up 0.5% to $72.93/bbl. Brent is 0.2% higher at $78.08 after a low of $77.77. Prices are up moderately so far this year driven by Middle East Tensions.

• The US struck Houthi missile launchers in Yemen after another merchant vessel was hit on Wednesday. Tensions in the Red Sea are not abating and more vessels are avoiding the waterway including oil and gas carriers with shipping costs rising sharply as a result. The UK has appealed to Iran to stop arming the group.
• Iran has sent missiles into other countries this week, including Iraq and Pakistan. Pakistan is reported to have now struck Iran in retaliation, adding significantly to the potential for conflict to spread in the region.
• Bloomberg reported a US crude inventory build of 483k barrels in the latest week, according to people familiar with the API data. Gasoline rose 4.86mn and distillate +5.21mn. The official EIA data is out later today.
• Later the Fed’s Bostic speaks twice on the economic outlook at 1230 and 1705 GMT, there will be Q&A at the second appearance. He will be a FOMC member in 2024. On the data front, there are US housing starts/permits, jobless claims and Philly Fed. The ECB December meeting accounts are published and President Lagarde appears.