BEIJING/SINGAPORE: On Tuesday, oil prices increased modestly, bolstered by Middle East unrest alongside China's economic stimulus measures and data, though worries over global growth, U.S. tariffs, and Russia-Ukraine ceasefire negotiations limited the rise. Brent futures increased by 17 cents, or 0.2 per cent, reaching $71.24 a barrel by 0350 GMT, while U.S. West Texas Intermediate crude futures climbed 14 cents, or 0.2 per cent, to $67.72 a barrel. ING analysts stated in a research report that alongside U.S. attacks on the Houthis in Yemen, various elements bolstered the market. China announced initiatives to boost consumption, as retail sales and fixed asset investment growth in the country exceeded expectations, per a Reuters report.
Oil Rises Amid Global Unrest
On Sunday, the state council, or cabinet, introduced a special action plan to enhance domestic consumption, featuring initiatives like increasing incomes and providing childcare subsidies. On Monday, Chinese economic figures revealed that retail sales growth accelerated in January-February, providing investors with some optimism despite a decline in factory output and the urban unemployment rate reaching its highest level in two years. Data released on Monday indicated that crude oil throughput in China, the largest crude importer globally, increased by 2.1 per cent in January and February compared to last year, boosted by a new refinery and travel during the holidays. Prices received further backing from President Donald Trump's promise to maintain the U.S. offensive against Yemen's Houthis unless they cease their assaults on vessels in the Red Sea, per Reuters.
In the Israel-Palestinian conflict, Israeli airstrikes in Gaza reportedly resulted in the deaths of at least 200 individuals, according to Palestinian health officials, as assaults on Tuesday concluded a prolonged standoff regarding the extension of a ceasefire that had paused hostilities in January. Emphasising ongoing worries regarding demand, a significant downside risk for oil, the OECD noted on Monday that Trump's tariffs would hinder growth in the United States, Canada, and Mexico, thereby affecting global energy demand. "Given the rise in global supply and the impending impact of tariffs and trade conflicts on global demand, we continue to believe that prices will decline and ultimately settle in the mid $60s," stated Robert Rennie, Westpac's head of commodity and carbon strategy.
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In addition to increasing global supply, Venezuela's state-owned PDVSA has outlined three operational scenarios that suggest it intends to keep producing and exporting oil from its collaboration with Chevron after the U.S. major's license lapses next month, based on a company document examined by Reuters on Monday. Discussions on Tuesday between Trump and Russian President Vladimir Putin regarding the conclusion of the Ukraine conflict were also highlighted. Markets anticipate that a possible peace agreement could lead to the relaxation of sanctions on Russia and the reinstatement of its crude oil to worldwide markets, impacting prices.
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