Oil prices, which had risen for a second day in a row on Wednesday amid escalating attacks by Houthi rebels in the Red Sea, fell into negative territory after inventory data showed a surprise build in the US.
Oil prices pared back earlier gains after the latest Energy Information Administration data showed a surprise crude build of 1.34 million barrels last week, versus expectations for a draw.
Oil prices had been trading higher during the session after Houthi rebels backed by Iran launched their largest drone and missile attacks on vessels in the Red Sea, an important waterway that connects to the Suez Canal. The attacks are in response to the Israel-Hamas war.
Since mid-November “at least 23 commercial vessels have been targeted,” according to Freightos Terminal, a shipping data platform.
The companies are forced to send shipments around the cape of Africa, making their trips longer.
“Given the current conditions many analysts are once again calling for world oil consumption to outstrip supply into the first quarter of this year, especially if OPEC remains diligent on production cuts,” Dennis Kissler, senior vice president at BOK Financial, said on Wednesday.
Crude futures rebounded on Tuesday on signs Russian crude exports started 2024 in line with cuts promised by the OPEC+ member. The rebound was a reversal from Monday when prices started the week down more than 3%.
Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.