Oil Prices Edging Up on Middle East Tensions and Recovering China Demand
Oil Prices Edging Up
Oil prices edged up on Tuesday, hovering close to three-week highs on heightened Middle East tensions and recovering China demand. Brent crude futures ticked up 3 cents to $83.59 a barrel by 0757 GMT, while U.S. West Texas Intermediate (WTI) crude for April delivery inched up 2 cents to $78.48 a barrel.
Middle East Tensions
Crude markets were “marginally lower” in “quiet trading over the Presidents’ Day holiday in the U.S. and as demand concerns offset ongoing Middle Eastern geopolitical tensions,” IG market analyst Tony Sycamore said in a note.
Geopolitical Unrest
The Iran-aligned Houthis continued their attacks on shipping lanes in the Red Sea and Bab al-Mandab Strait, with at least four more vessels hit by drone and missile strikes since Friday. This has raised the stakes in their campaign to disrupt global shipping in solidarity with the Palestinians in Gaza.
China Demand
On the other hand, tourism revenues in China surged 47.3% year-on-year and rose above pre-COVID levels during the national Lunar New Year holiday that ended on Saturday. Additionally, China also made a record cut in a benchmark reference rate for mortgages on Tuesday, in a bid to shore up its beleaguered property market and economy.
Renewable Energy Impact
However, the price-supportive factors did not completely offset demand worries. A bearish International Energy Agency (IEA) report last week revised the 2024 oil demand growth forecast downward on expectations that renewable energy would supplant fossil fuel usage.
