0il Retreats for Second Session as Global Demand Worries Mount

Image Credit: Reuters

Oil prices dipped on Tuesday, marking a second straight session of losses following last week's rally, though concerns over reduced Russian and Iranian supplies due to expanded Western sanctions helped limit the decline.  

By 0452 GMT, Brent crude slipped 8 cents (0.1%) to $76.22 per barrel, while U.S. West Texas Intermediate (WTI) crude dropped 15 cents (0.19%) to $73.42. Both benchmarks had fallen on Monday after five consecutive days of gains, which pushed prices to their highest levels since October, driven by hopes for fiscal stimulus to support China's struggling economy.  

"The recent weakness is likely a technical correction, as traders respond to softer global economic data that dampened earlier optimism," said Priyanka Sachdeva, senior market analyst at Phillip Nova, citing bearish news from the U.S. and Germany.  

Adding pressure to oil prices is an expected rise in non-OPEC supply combined with subdued demand from China, which is anticipated to maintain a well-supplied oil market this year.  

Investors are looking ahead to key data, including the U.S. December nonfarm payrolls report on Friday, for insights into U.S. interest rate policy and oil demand trends.  

"The upward momentum in crude oil prices appears to be fading," ING analysts noted, adding that while some tightening has occurred in the physical market, fundamentals through 2025 suggest ample supply, which could limit price increases.  

However, concerns over reduced Russian and Iranian output due to sanctions provided support to oil prices. This uncertainty has boosted demand for Middle Eastern oil, as reflected in Saudi Arabia's decision to raise its February oil prices for Asia—the first increase in three months.  

Additionally, money managers increased their net long positions in U.S. crude futures and options during the week ending December 31, according to the U.S. Commodity Futures Trading Commission.

 

 

 

 

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