On Tuesday, oil prices edged up due to Middle Eastern instability and China’s economic stimulus, despite global growth concerns and U.S. tariffs. Brent crude rose to $71.24, while WTI increased to $67.72. Various factors, including U.S. military action in Yemen and a resurgence in Chinese consumption, supported the market, though concerns about demand persist.
On Tuesday, oil prices experienced a modest increase, buoyed by instability in the Middle East and China’s stimulus initiatives, despite ongoing global growth concerns, U.S. tariffs, and discussions regarding the Russia-Ukraine ceasefire. Brent futures rose by 17 cents, reaching $71.24 per barrel, while U.S. West Texas Intermediate crude futures increased by 14 cents to $67.72 per barrel.
ING analysts highlighted several market support factors, including U.S. strikes on Houthi positions in Yemen. Additionally, China announced plans for boosting domestic consumption, revealing stronger-than-expected growth in retail sales and fixed asset investment. This action plan includes measures to enhance incomes and provide childcare subsidies, aiming to revive consumer activity.
Chinese economic data showed an uptick in retail sales growth for January and February, promoting optimism among investors, even as factory output declined and urban unemployment hit a two-year high. Moreover, China’s crude oil processing increased by 2.1% during the same period, spurred by a new refinery and holiday travel, as reported by official sources.
Support for oil prices also stemmed from U.S. President Donald Trump’s commitment to maintain military actions against Yemen’s Houthis amidst their alleged maritime threats. Meanwhile, recent Israeli airstrikes in Gaza resulted in significant casualties, worsening existing tensions in the region.
Concerns regarding demand persist, as the OECD highlighted the negative impact of Trump’s tariffs on growth in North America, which may depress global energy consumption. Robert Rennie of Westpac remarked on the potential for prices to decline further into the mid $60s due to surging global supply and trade disputes.
In addition, Venezuela’s PDVSA outlined plans to continue oil production and exports in partnership with Chevron, even after the expiration of their U.S. license next month. Attention is also focused on discussions between Presidents Trump and Putin on the Ukraine conflict, with speculation that a peace agreement might lead to sanctions relief for Russia and a subsequent return of its crude supplies to the market, which would have downward pressure on prices.
In summary, oil prices rose slightly due to geopolitical instability and positive economic indicators from China, despite global growth concerns and the impact of U.S. tariffs. The dynamic factors in the Middle East and potential developments concerning Russia and Ukraine further complicate the outlook for oil markets. Analysts remain wary of long-term price declines influenced by ongoing trade tensions and increased global oil supply.
Original Source: shafaq.com
