Oil Prices Trim Gains as Syria Crisis and China's Stimulus Provide Support

Image Credit: Reuters

 

Oil prices dipped slightly on Tuesday but retained most of their gains from the previous session, supported by rising geopolitical tensions following the fall of Syrian President Bashar al-Assad and China's pledge to increase policy stimulus.

Brent crude futures were down 13 cents, or about 0.2%, at $72.01 per barrel. U.S. West Texas Intermediate crude futures fell 14 cents, also down 0.2%, to $68.23 at 0151 GMT. Both benchmarks had climbed over 1% on Monday. Geopolitical risks, particularly the collapse of the Syrian government, added a slight risk premium to oil prices, as noted by ANZ Research.

Although Syria isn't a major oil producer, its strategic location and ties with Russia and Iran mean a regime change could destabilize the region further.

Syrian President Assad’s prime minister confirmed Monday that he agreed to hand power to the rebel-led Salvation Government, a day after rebels seized the capital, Damascus, and Assad fled to Russia. This marks the end of over 50 years of Assad family rule following 13 years of civil war.

Oil prices were also supported by reports that China will implement an "appropriately loose" monetary policy next year, marking its first easing in 14 years to boost economic growth. Despite a drop in China's consumer inflation to a five-month low in November, analysts expect crude oil to benefit from China’s fiscal stimulus moving forward.

Tony Sycamore, an analyst at IG, suggested that Tuesday’s slight weakness in prices could present a buying opportunity, with crude potentially reaching the top of its recent range around $72.50.

Markets are awaiting China's trade data for November on Tuesday and a report from the American Petroleum Institute (API) later in the day, expected to show a decrease in U.S. crude oil and gasoline stockpiles. A preliminary Reuters poll indicated that U.S. crude oil and gasoline inventories likely fell, while distillate stocks may have increased. The Energy Information Administration’s official report is due Wednesday.

Additionally, oilfield service companies in the U.S. ramped up hiring in November, adding 1,890 jobs, signaling more drilling and higher oil production.

 

 

 

 

 

 

 

 

Paraphrasing text from "Reuters" all rights reserved by the original author.