NEW YORK: Oil prices rose for the second consecutive session on Tuesday, as traders downplayed hopes of a Middle East ceasefire and focused on a tightening global supply and demand balance.
Brent crude futures for December delivery were up $1.94, or 2.6%, to $76.23 at 12:24 a.m. ET (1624 GMT). U.S. West Texas Intermediate futures for November delivery were up $1.98, or 2.8%, at $72.54 a barrel on the contract’s last day as the front month.
U.S. Secretary of State Antony Blinken met Israeli Prime Minister Benjamin Netanyahu on Tuesday in the first big push for a Middle East ceasefire since Israel killed the leader of Hamas last week, which Washington hopes will provide an opportunity for peace.
However, oil traders were not convinced this push will be much different from Blinken’s previous 11 visits to the region since the war in Gaza erupted last year, said Bob Yawger, director of energy futures at Mizuho.
Oil traders are also weighing the implications for fuel demand from China’s stimulus measures and a tightening global supply and demand balance, said Alex Hodes, energy analyst at brokerage StoneX.
Oil prices gain 2pc, recouping some of last week’s loss
Both Brent and WTI rose nearly 2% on Monday, recouping some of last week’s more than 7% decline, following Beijing’s cut to benchmark lending rates in an effort to revive China’s slowing economy.
“I think that it is more of a signal that they are willing to support demand and we have perhaps seen the low point in demand,” Hodes said. He warned the stimulus by itself may not improve China’s oil demand by much in the near-term.
China’s oil demand growth is expected to remain weak in 2025 as the world’s No. 2 economy electrifies its car fleet and grows at a slower pace, the head of the International Energy Agency said on Monday.
Still, Saudi Aramco is fairly bullish on China’s oil demand especially in light of the government’s stimulus package which aims to boost growth, the head of the state-owned Saudi oil giant said on Monday.
Despite doubts over China demand, global oil stockpile data is pointing to a supply deficit in the fourth quarter, which should support oil prices in the months ahead, Hodes said.
“Global petroleum inventories remain in a drawing phase and are now below 2023 levels. The trend is expected to continue, and the most recent week pointed to a re-acceleration,” Hodes said.
U.S. crude oil stockpiles likely rose by around 100,000 barrels last week, while distillate and gasoline stocks fell by more than 1.5 million barrels each, a preliminary Reuters poll showed. Crude stocks had dropped by 2.2 million barrels in the week ended Oct. 11.
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