BEIJING/SINGAPORE: Oil prices rose slightly on Tuesday, supported by instability in the Middle East as well as China’s stimulus plans and data, although global growth concerns, US tariffs and Russia-Ukraine ceasefire talks curbed gains.
Brent futures rose 36 cents, or 0.5 percent, to $71.43 a barrel by 10:00 a.m Saudi time, while US West Texas Intermediate crude futures rose 32 cents, or 0.5 percent, to $67.90
“Along with US strikes on the Houthis in Yemen, several factors provided support to the market,” ING analysts said in a research note.
“China unveiled plans to revive consumption, while Chinese retail sales and fixed asset investment growth came in stronger than expected.”
The state council, or cabinet, unveiled on Sunday a special action plan to boost domestic consumption, with measures such as boosting incomes and offering childcare subsidies.
On Monday, Chinese economic data showing that retail sales growth quickened in January-February also gave investors reasons for optimism, although factory output fell and the urban jobless rate reached its highest in two years.
Crude oil throughput in China, the world’s biggest crude importer, rose 2.1 percent in January and February from a year earlier, supported by a new refinery and holiday travel, official data showed on Monday.
Prices also gained support from President Donald Trump’s vow to continue the US assault on Yemen’s Houthis unless they end their attacks on ships in the Red Sea.
On the Israel-Palestinian conflict, Israeli air strikes in Gaza killed at least 200 people, Palestinian health authorities said, as attacks on Tuesday ended a weeks-long standoff over extending a ceasefire that halted fighting in January.
Highlighting persistent concerns about demand, a key downside risk for oil, the OECD said on Monday that Trump’s tariffs would drag down growth in the US, Canada and Mexico, which would weigh on global energy demand.
“With global supply surging and tariffs and trade wars set to hit global demand, we remain of the view that prices will head lower and eventually reach the mid $60s,” said Robert Rennie, head of commodity and carbon strategy at Westpac.
Further adding to global supply, Venezuela’s state-run PDVSA has put together three operational scenarios indicating it plans to continue producing and exporting oil from its joint venture with Chevron after the
US major’s license expires next month, according to a company document reviewed by Reuters on Monday.
Talks on Tuesday between Trump and Russian President Vladimir Putin about ending the Ukraine war were also in focus.
Markets believe a potential peace negotiation would involve the easing of sanctions on Russia and the return of its crude supply to global markets, weighing on prices.
