Brent crude dropped 39 cents to $75.50 a barrel, while U.S. WTI crude futures slid 51 cents to $69.87 a barrel

Oil prices slipped slightly on Wednesday after sharp moves earlier in the week, with investors cautious about the U.S. economy amid supply disruptions from escalating tensions in the Red Sea.

Brent crude dropped 39 cents to $75.50 a barrel by 1056 GMT, while U.S. West Texas Intermediate (WTI) crude futures slid 51 cents to $69.87 a barrel.

Prices had jumped nearly $2 earlier in the week following attacks on vessels in the Red Sea.

Although the supply of oil has not been affected, as reflected in yesterday’s oil price sell-off, the nervousness is conspicuous, said Tamas Varga of PVM.

Both benchmarks ended Tuesday over 1% down, with optimism about early and aggressive U.S. interest rate cuts also ebbing ahead of the release of Fed meeting minutes and jobs data on Wednesday.

The market bade farewell to 2023 with a considerable liquidation of length and persisting anxiety about the geopolitical outlook failed to draw buyers back to the fore as the new year has kicked off, said Varga.

In the meantime, expectations of ample oil supply in the first half of 2024 have kept a lid on prices ahead of OPEC+ plans to hold a meeting of its JMMC in early February.

The decision to hold the meeting in early February suggests OPEC+ is possibly growing uneasy over currently weak oil market conditions, in spite of voluntary cuts of 2.2 million barrels a day for the first quarter agreed in November, OANDA’s senior market analyst Kevin Wong said.

WTI oil is likely to trade sideways in the short term between $68.90 and $72.30 a barrel, close to the downward-sloping 20-day moving average, Wong said.