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Oil prices start 2024 lower: Supply concerns ease

OIL prices closed the first trading session of 2024 lower as expectations for interest rate cuts waned and on easing concerns that tensions in the Red Sea will disrupt supplies.

Brent crude settled at US$75.89, down by US$1.15 or 1.5 per cent. US West Texas Intermediate crude settled at US$70.38 a barrel, down by US$1.27 or 1.8 per cent.

Prices fell as investors tempered expectations about interest-rate cuts in 2024. Lower interest rates reduce consumer borrowing costs, which can boost economic growth and oil demand.

The dollar also strengthened on Tuesday, while stock prices slipped, further pressuring oil lower. A stronger dollar makes oil more expensive for investors holding other currencies.

Oil prices had climbed around US$2 in earlier trading following attacks on vessels in the Red Sea by Houthi rebels over the weekend, and the reported arrival of an Iranian warship on Monday.

“The market is correcting itself in so far as there have been no supply disruptions and they think it is unlikely that the Iranian warship will engage with American warships,” said Andrew Lipow, president of Lipow Oil Associates.

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