Oil Prices Maintain Near Three-Week Peaks Amid Middle East Tensions and Chinese Demand
Oil prices remained relatively steady during early Asian trading on Tuesday, staying close to three-week highs due to escalating tensions in the Middle East and a resurgence in demand from China.
Brent futures saw a slight decline of 8 cents, settling at $83.48 a barrel by 0133 GMT. Meanwhile, U.S. West Texas Intermediate (WTI) crude for April delivery edged down 10 cents to $78.36 a barrel. The March WTI contract rose 26 cents to $79.45 a barrel as traders prepared for its expiration later in the day.
According to IG market analyst Tony Sycamore, crude markets experienced marginal decreases in quiet trading during the Presidents’ Day holiday in the U.S., with ongoing geopolitical tensions in the Middle East offsetting demand concerns.
The Iran-aligned Houthis continued their assaults on shipping routes in the Red Sea and Bab al-Mandab Strait, targeting at least four additional vessels with drone and missile strikes since Friday.
One vessel, the Belize-flagged, British-registered, and Lebanese-managed Rubymar cargo ship in the Gulf of Aden, was reportedly in danger of sinking, as announced by the Houthis, escalating their efforts to disrupt global shipping in solidarity with Palestinians in Gaza.
ANZ analysts noted signs of increased demand in China, citing a 47.3% surge in tourism revenues year-on-year, surpassing pre-COVID levels during the Lunar New Year holiday that concluded on Saturday. Additionally, China’s decision to cut a benchmark reference rate for mortgages by more than expected on Tuesday aimed to bolster its struggling property market and economy.
However, despite these supportive factors, concerns over demand persisted. A pessimistic report from the International Energy Agency (IEA) last week lowered the 2024 oil demand growth forecast due to expectations of increased adoption of renewable energy, potentially displacing fossil fuel consumption.
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