Oil Prices Maintain Monday’s Gains amid Mixed Supply and Chinese Recovery Indicators

There hasn’t been much change in oil prices on Tuesday as traders are analyzing a series of conflicting and alarming data on supply and demand amid increasing tensions in the Middle East and weather-related disruptions in the United States.

By 0353 GMT, Brent crude futures fell 2 cents to $80.04 a barrel, while U.S. West Texas Intermediate (WTI) crude futures dropped 10 cents to $74.75 a barrel.

On Monday, the two crude benchmarks rose about 2% after a Ukrainian drone attack on the Ostroleka fuel export station owned by Russian company Novatek raised concerns about supplies and subsequently led to price hikes.

Analysts expect Novatek to largely resume operations there within weeks.

A report by A.Z. Research analysts stated that while the loading docks at the station were damaged and temporarily affected exports, this move raises the possibilities of the Russian-Ukrainian war moving into a new phase as both parties target key energy infrastructure.

In the Middle East, U.S. and British forces carried out new strikes targeting underground storage sites for the Houthis, as well as missile capabilities and monitoring. The attacks launched by the Houthis on ships in the Red Sea and its surroundings have disrupted global shipping.

The Houthi group stated that their attacks will continue until the war on Gaza ceases.

Leon Lee, an analyst at C.M.C. Markets in Shanghai, said, “Without any concerns about a downturn, the severe weather’s impact on U.S. oil production and escalating geopolitical tensions continue to support oil prices.”

On Monday, the state’s pipeline administration stated that 20% of oil production in North Dakota, United States, remained halted due to extreme cold and operational difficulties.

However, weighing on the markets are concerns about the sluggish economic recovery in China, which is the world’s largest crude oil importer, and its impact on global oil demand.

Chinese policymakers have introduced a set of measures to support the economy, but domestic consumption remains weak, causing oil traders to be anxious about demand prospects. (Reuters)