Oil Drifts Lower in Pre-Holiday Trading as Dollar Strengthens

(Bloomberg) -- Oil edged lower in thin pre-holiday trading as the dollar strengthened and Russia’s Druzhba pipeline resumed flows. 

West Texas Intermediate slid 0.3% to settle near $69 a barrel while Brent settled below $73. Both benchmarks pared losses after the close and were trading little changed. 

Belarus and Hungary are among the nations once again receiving crude via the key Druzhba pipeline after a short halt last week due to an unspecified incident.

In the Americas, President-elect Donald Trump said the Panama Canal — through which roughly 2% of global oil supply flows — is charging “exorbitant” fees, a claim that Panama’s president rebuffed. The dollar advanced after the US government averted a shutdown, tempering the appeal of commodities. 

The criticism of Panama follows threats by Trump to impose tariffs on Canada, Mexico and China — as well as on the European Union if the bloc doesn’t buy more US oil and natural gas. The increased uncertainty has failed to jolt crude out of a narrow range it has traded in since mid-October, with lackluster demand in China and expectations of ample supply limiting gains.

“The market is largely dismissing the Panama Canal headlines as rhetoric for now, with greater attention shifting to supply-and-demand fundamentals shaping the outlook for 2025,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group. 

Hedge funds, however, have shown some signs of growing more bullish, with their net-long position on West Texas Intermediate crude rising by the most in more than a year in the week to Dec. 17, according to data from the US Commodities Futures Trading Commission. That came after prices rallied on the prospect of sanctions that would reduce supplies of Russian and Iranian oil. 

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