Investing.com-- Oil prices steadied in Asian trade on Monday following six straight weeks of losses amid growing optimism over early monetary easing in 2024, while attacks on U.S. vessels in the Red Sea fueled some concerns over Middle East supply disruptions.
Crude prices had tumbled back to sub-$80 a barrel levels following largely underwhelming production cuts by the Organization of Petroleum Exporting Countries and allies (OPEC+).
But Brent Crude found some support around $78 a barrel, given that supplies are still expected to tighten in the first quarter of 2024.
Weakness in the dollar, following seemingly less hawkish signals from Federal Reserve Chair Jerome Powell, also offered oil prices some relief.
Brent oil futures expiring February were flat at $78.77 a barrel, while West Texas Intermediate crude futures steadied at $74.21 a barrel by 20:36 ET (01:36 GMT).
Red Sea attacks see resurgence in Middle East supply concerns
The Pentagon said over the weekend that multiple U.S. military and commercial vessels were attacked in the Red Sea, while Yemen’s Houthi Group claimed it had carried out drone and missile attacks on Israeli vessels in the area.
The reports saw traders pricing in some risk premium into crude. Fears of the Israel-Hamas war had steadily trickled out of markets over the past month, as the conflict had so far caused little disruptions in Middle Eastern supplies.
But the new attacks could herald a potential spillover of the conflict, drawing in the U.S. and other Middle Eastern powers and potentially disrupting supplies.
Last week, talks to extend a week-long truce between Israel and Hamas had collapsed, sparking a resumption in the war.
Oil markets still contend with demand fears, less tight supplies
But despite some positive signals over the weekend, crude markets remained largely skewed to the downside, as the disappointing OPEC+ cuts failed to soothe concerns over slowing economic activity across the globe.
Purchasing managers index (PMI) readings from several major economies showed that business activity remained weak in November. Weak PMI prints from top crude importer China and top fuel consumer U.S. were a key source of contention for markets.
Concerns over slowing economic activity- which could in turn dent oil demand- were a key weight on crude markets this year, especially as most major central banks also signaled that interest rates will remain restrictive for longer.
On the supply front, U.S. production remained at record highs in recent weeks, while easing fuel demand in the country saw outsized builds in crude inventories.