(Bloomberg) -- Oil closed at three-week high as shipping disruptions in the Red Sea continued to a spate of Houthi attacks against vessels in the vital waterway.
West Texas Intermediate settled above $75 a barrel after rallying 3% last week, its biggest weekly advance since October.Â
Iran-backed Houthi rebels claimed responsibility for attacking a container ship in the Red Sea on Tuesday, and vowed more strikes. The incident is the latest in a string of attacks by Houthi rebels based in Yemen. Earlier, the UK navy reported an explosion and missiles seen near vessel off the coast of Yemen, hours after blasts were reported near another ship.Â
Despite container giant A.P. Moller-Maersk A/S stating Sunday that it's preparing to resume using the Red Sea under the protection of the new multinational maritime task force, many others continue to shun the Suez Canal in favor of safer but longer voyages. Meanwhile, US strikes in Iraq on Christmas Day highlighted the risk that the Israel-Hamas war could widen into a broader regional conflagration.Â
Crude's recent gains helped to pare an annual decline, with oil now on course for a loss of about 6% this year. Timespreads have strengthened. Brent's prompt spread — the difference between its two nearest contracts — has swung to 22 cents a barrel in backwardation, a bullish near-term pricing pattern, versus 16 cents a barrel in the opposite contango structure a week ago.
The week between the Christmas and New Year holidays is likely to see lackluster liquidity, with combined aggregate open interest across the main oil contracts tracking lower since about the middle of this month. Oil's implied volatility has also declined over recent weeks.
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