Oil prices declined on Tuesday, but hovered near the three-week highs as tensions in the Middle East and signs of recovering demand in China provided support to the market.
By 09:59 GMT, Brent crude futures recorded $82.91 per barrel, a 0.78 percent decline. Meanwhile, U.S. West Texas Intermediate (WTI) crude recorded $78.93 per barrel, a 0.33 percent decrease.
China’s economic recovery
Oil prices experienced marginal fluctuations amidst quiet trading over the Presidents’ Day holiday in the U.S. Moreover, concerns over demand offset the impact of ongoing geopolitical tensions in the Middle East. The rising tensions in the Red Sea continue to raise concerns about disruptions to global shipping.
Positive economic indicators from China also contributed to the stabilization of oil prices near the three-week high. Tourism revenues surged by 47.3 percent year-on-year during the Lunar New Year holiday, surpassing pre-COVID levels. Additionally, China implemented a record cut in benchmark mortgage rates to stimulate its property market and bolster economic growth.
Middle East tensions and China’s demand recovery are positive indicators that may support higher oil prices. However, the influence of the U.S. Dollar’s strength and potential changes in Federal Reserve interest rate policies could counterbalance these bullish trends.
Read: Saudi Arabia’s Aramco plans bond issuance in 2024
Mixed sentiment
While geopolitical tensions and Chinese demand supported oil prices, concerns lingered over long-term demand prospects. A bearish report from the International Energy Agency (IEA) last week revised downward the forecast for oil demand growth in 2024, citing the expected rise of renewable energy at the expense of fossil fuels.
