HOUSTON: Oil prices rose on Tuesday as markets looked to rising demand in China, the world’s largest buyer, and possible tight supply in Europe this coming winter and away from the overthrow of Syria’s president.
Brent crude futures were up 51 cents, or 0.71%, to $72.64 a barrel at 1043 a.m. CST (1643 GMT). U.S. West Texas Intermediate was up 59 cents, or 0.86%, at $68.97. Both benchmarks had risen more than 1% on Monday.
Support came from reports that China will adopt “appropriately loose” monetary policy in 2025 as Beijing tries to spur economic growth.
This would be the first easing of its stance in 14 years, though details remain thin.
Chinese crude imports also grew annually for the first time in seven months, jumping in November from the year-earlier period.
The increase, however, “was more a function of stockpiling than demand improvement,” said Tamas Varga of oil broker PVM.
“The economy will only be stimulated by improving consumer sentiment and spending, by a rise in domestic aggregate demand echoed in a healthy increase in consumer inflation,” he added. Hedge funds were buying on speculation about winter demand, said Phil Flynn, senior analyst with Price Futures Group.
“Hedge funds are starting to buy on tightness of supply in European markets this winter,” Flynn said.
In Syria, rebels were working to form a government and restore order after the ousting of President Bashar al-Assad, with the country’s banks and oil sector set to resume work on Tuesday.
“The tensions in the Middle East seem contained, which led market participants to price for potentially low risks of a wider regional spillover leading to significant oil supply disruption,” IG market strategist Yeap Jun Rong said.
While Syria itself is not a major oil producer, it is strategically located and has had strong ties with Russia and Iran.
Oil prices could receive a boost if the U.S. Federal Reserve comes through with an expected quarter-percentage-point cut to interest rates at the end of its Dec. 17-18 meeting.
That could juice oil demand in the world’s biggest economy, though traders are waiting to see if this week’s inflation data derails the cut.
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