© Reuters.
biedexmarkets.com– Oil prices fell Tuesday, as traders returning after Monday’s U.S. holiday weighed a weak outlook for demand against worsening geopolitical conditions in the Middle East, which could potentially disrupt supplies.
By 09:15 ET (14.15 GMT), the futures traded 0.3% lower at $78.20 a barrel and the contract dropped 0.2% to $83.41 a barrel.
While crude prices had a strong run-up over the past two weeks, they appeared to have largely stalled in recent sessions as traders grew increasingly pessimistic over the outlook for demand.
Strong U.S. inflation data saw traders further price out the prospect of early interest rate cuts by the Federal Reserve, while the International Energy Agency warned of slowing global crude demand in the coming year.
Fourth-quarter recessions in the UK and Japan also further soured the demand outlook.
That said, prices remained underpinned by persistent concerns over supply disruptions in the Middle East, as the Yemeni Houthis continued to clash with U.S. forces, while the Israel-Hamas war raged on.
The U.S. has called for a temporary ceasefire in the war, and has also said that it opposes a major ground offensive by its ally Israel in the city of Rafah.
That said, Israel still appears set to march into Rafah, a move that would sharply worsen the humanitarian crisis in Gaza, and undoubtedly heighten geopolitical tensions in the region.
Fears of increased supply disruptions have been the biggest driving force for oil prices in recent weeks, although prices are still trading well below highs hit in early-2022. Concerns over slowing demand also saw crude prices clock a 10% decline through 2023.
China offered some positive cues on demand, as travel spending surpassed pre-COVID highs during the week-long Lunar New Year holiday.
China’s central bank also unexpectedly cut its on Tuesday, unlocking more liquidity for domestic markets.
(Ambar Warrick contributed to this article.)
