Oil Jumps Over 2% On US Economic Activity, Red Sea Tensions
Oil prices rose on Thursday to their highest since early December after US economic data showed faster-than-expected growth in the last quarter and as tensions in the Red Sea kept disrupting global trade.
Brent futures rose USD 1.85, or 2.31 per cent to USD 81.89 a barrel at 2:02 p.m. EST (1902 GMT). US West Texas Intermediate crude gained USD 1.76, or 2.34 per cent to USD 76.85.
Geopolitical tensions in the Middle East and the disruption of shipping in the Red Sea corridor remained in focus.
Maersk said that explosions forced two ships operated by its US subsidiary that were carrying US military supplies to retreat when they were transiting the Bab al-Mandab Strait off Yemen, accompanied by the US Navy.
Meanwhile, Yemen's Houthi leader said the group would continue targeting ships linked to Israel until aid reaches the Palestinian people in Gaza.
"We are finally seeing energy markets wake up to the distinct possibility that these supply chain disruptions will rumble on for months yet," said Joshua Mahony, chief market analyst at Scope Markets.
"The prospect of a military solution to ensure safe passage looks unlikely," he added.
A Ukrainian drone attack on an oil refinery in southern Russia overnight also sparked supply worries, said Bob Yawger, director of energy futures at Mizuho.
In the US, a larger-than-expected draw in crude inventories last week, primarily because of extreme cold, also supported prices. US inventories fell by 9.2 million barrels last week, according to the Energy Information Administration.
Data on Thursday showed the US economy grew at a faster pace than expected in the fourth quarter, a positive demand indicator, Yawger said.
Oil prices also drew support from the expectation China's economy is recovering after the central bank announced a deep cut in bank reserves on Wednesday.
Elsewhere, however, the prospect of sustained high-interest rates loomed.
The European Central Bank on Thursday retained its record-high benchmark rate of 4 per cent, giving no hint that policymakers were contemplating policy easing.
