Oil Prices Hold Steady Near Three-Week High

There was no significant change in oil prices in early Asian trading, hovering near their highest levels in three weeks due to escalating tension in the Middle East and a recovery in Chinese demand.

The futures contracts for Brent crude fell by eight cents to $83.48 per barrel by 0133 GMT.

Meanwhile, the US West Texas Intermediate crude oil for April delivery dropped by ten cents to $78.36 per barrel.

The West Texas Intermediate crude oil contract for March rose 26 cents to $79.45 per barrel, as traders prepared for the expiration of this contract during the day.

According to Tony Sycamore, the market analyst at IG, in a note, crude oil markets were “slightly lower” in “quiet trading during Presidents’ Day holiday in the United States, with demand concerns overshadowing the ongoing geopolitical tensions in the Middle East”.

The attacks on shipping lanes in the Red Sea and Bab el-Mandeb strait continued, with at least four other ships being targeted by drone strikes and missiles since Friday.

The Houthi group stated that one of the ships, the cargo vessel Marib, flying the flag of Belize and registered in Britain and operated by Lebanon, is at risk of sinking in the Gulf of Aden, further increasing the risks in their campaign to disrupt global shipping in solidarity with Palestinians in Gaza.

Analysts at ANZ wrote in a note that “strong demand indicators in China have also boosted morale.”

Tourism revenues in China increased by 47.3 percent on an annual basis and exceeded pre-COVID-19 levels during the Lunar New Year holiday that ended on Saturday.

China also lowered the benchmark interest rate for real estate loans more than expected on Tuesday in an attempt to support the real estate market and the economy.

However, the supportive factors for prices have not fully offset demand concerns. Last week, the International Energy Agency revised down its oil demand growth expectations for 2024 amid predictions that renewable energy will replace fossil fuels. (Reuters)