Oil drifted in thin end-of-year trading, with investors assessing the outlook for 2025 while tracking developments in the Middle East. Brent steadied near $73 a barrel, after shedding 0.4% on Thursday, while West Texas Intermediate held below $70 a barrel. A gauge of 10-day volatility for the US crude benchmark has ebbed to the lowest since 2021, with the same metric for Brent declining to the narrowest reading since March.
In the Middle East, Israel struck targets in Yemen that it said were controlled by Houthis, the last of the Iran-backed groups still fully engaged in the regional war that began 14 months ago. The rebels have been menacing shipping in the Red Sea, forcing tankers onto longer routes around southern Africa.
Crude is on track for a modest annual loss, although trading has been confined in a narrow band since mid-October. There are widespread concerns the market may be oversupplied next year as China’s demand slows and global supplies expand, although traders remain cautious about potentially tighter US sanctions against flows from Iran under Donald Trump’s presidency.
“The crude oil market is pretty stable in this low-volatility dynamic,” said Gao Jian, an analyst at Qisheng Futures Co., adding that investors’ concerns over the supply-demand balance, as well as geopolitics, “remain unresolved.”
WTI’s prompt spread, with the nearby contract trading at a premium of 39 cents a barrel to the next in line, points to near-term tightness. Earlier this week, a US industry group flagged a drop in nationwide crude stockpiles.
