WTI takes a breather near $74.00, US establishes a task force to safeguard Red Sea

• WTI edges lower as US Dollar attempts to retrace its recent losses.
• US appointed a task force to protect shipping commerce in the Red Sea.
• US is expected to increase oil production which may exceed the growing global demand in 2024.

West Texas Intermediate (WTI) snaps a two-day winning streak, trading lower around $74.00 per barrel during the Asian session on Wednesday. However, Crude oil prices found support from geopolitical disruptions, stemming from attacks by the Iran-led Houthi militant group on commercial vessels in the Red Sea.

The United States (US) has taken action by establishing a task force to safeguard Red Sea commerce in response to the attacks on commercial vessels in the Red Sea. This decision comes after virtual talks on Tuesday between US Defense Secretary Lloyd Austin and defense ministers from the region. Conversely, the Houthis have pledged to defy the US-led naval mission and continue their attacks.

According to S&P Global Commodity Insights, the United States is expected to increase oil production, contributing to robust non-OPEC+ supply growth that will likely exceed the growing global demand in the upcoming year. This projection suggests a potential limitation on the upward movement of Crude oil prices.

American Petroleum Institute (API) Weekly Crude Oil Stock on the week ending on December 15, rose to 0.939M, swinging from the previous decline of 2.349M figures. The US Energy Information Administration is set to release the Crude Oil Stocks Change report on Wednesday. Expectations indicate an improvement in stockpiles, with a forecasted decline to 2.233 million from 4.259 million prior.

Shell PLC and Equinor ASA announced on Tuesday the approval for a 90,000 barrels per day (bpd) oil and gas platform in the US Gulf of Mexico. Additionally, they expressed the intention to make aggressive investments in exploration to sustain production through 2050.