By Ken Afor
Oil prices rose in Asian trade on Tuesday after falling more than 3 percent in the previous session, as supply concerns from the Middle East conflict overshadowed a gloomy outlook from China data.
On Tuesday, Brent crude futures for December settlement were up 36 cents, or 0.41 percent, at $87.81 a barrel by 0305 GMT.
Brent crude futures for January delivery, which is heavily traded, traded at $86.64 a barrel, up 29 cents, or 0.34%.U.S. crude oil West Texas Intermediate was up 34 cents, or 0.41 percent, at $82.65 a barrel.
Oil prices fell more than 3 percent on Monday as investors remained cautious ahead of the US Federal Reserve’s meeting on Wednesday, despite Israel’s escalating attack on Gaza.
“Although it implemented a ground attack, it also retreated very quickly and Iran is currently only resorting to verbal deterrence,” said CMC Markets’ analyst Leon Li, who is based in the Chinese commercial hub of Shanghai.
“If this evolves into a full-scale invasion and there is involvement from Iran, tighter supply worries could resurface.”
Prices recovered from Tuesday’s technical correction, and the market’s rebound was due to Israel’s expanded ground offensive, he added.
“Disruptions to Iranian oil flows remain the most obvious risk to the market,” ING analysts said in a note.
They added that such supply losses could amount to 500,000 barrels per day (bpd) to 1 million barrels per day (bpd) if the United States reimposes tough sanctions. He added that the situation in the Middle East has not yet affected oil supply.
China’s manufacturing and non-manufacturing indicators were weaker than expected, raising concerns about slowing demand in the world’s second-largest oil consumer.
The official Purchasing Managers’ Index (PMI) missed expectations, falling below the 50-point threshold that separates economic contraction from growth.
Concerns about Venezuela’s oil export outlook, hurt by election uncertainty, provided some support for oil prices.
Analysts at ING said the Supreme Court’s suspension of the results of this month’s opposition presidential primaries could raise questions about whether the United States will continue to ease sanctions against Venezuela.
The United States recently decided to ease sanctions to ensure fair elections in 2024, he added.
Markets were closely watching the US central bank’s meeting, which will weigh on domestic demand for fuel despite the possibility of interest rates remaining unchanged, according to a survey by CME’s Fedwatch tool.
