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Oil prices hovered near $74 a barrel on Tuesday as geopolitical tensions in the Middle East and concerns over weakening demand growth in China, the world’s top oil importer, continued to influence the market.
Brent crude futures for December delivery slipped 20 cents, or 0.27%, to $74.09 per barrel by 0855 GMT. U.S. West Texas Intermediate (WTI) crude for November delivery fell by 20 cents to $70.36 on its last trading day as the front month. The more actively traded December WTI contract, set to take over as the front month, was down 22 cents, or 0.3%, at $69.82.
Both Brent and WTI rebounded by nearly 2% on Monday after last week’s steep losses, driven by persistent concerns that escalating tensions between Israel and Iran could disrupt oil supplies. U.S. Secretary of State Antony Blinken’s efforts to mediate a ceasefire in the Middle East also influenced market sentiment as he began a tour to defuse the Gaza conflict.
The oil market remains cautious as traders weigh the impacts of China’s recent economic stimulus measures and improved U.S. economic data. However, concerns about a slowing global economy continue to cap potential gains.
Data released last week revealed China’s economy grew at its slowest pace since early 2023 in the third quarter, intensifying fears about future oil demand. Despite recent stimulus efforts, the International Energy Agency (IEA) forecasts that China’s oil demand growth may remain weak in 2025 as the country transitions to electric vehicles and experiences slower economic growth.
Meanwhile, Saudi Aramco remains optimistic about China’s oil demand, expecting a boost from Beijing’s stimulus package aimed at economic growth.
Adding further pressure to oil prices is the strength of the U.S. dollar, which is being bolstered by easing global inflation. A stronger dollar typically weighs on oil prices, making dollar-denominated oil more expensive for non-dollar holders.
In the U.S., crude oil stockpiles likely rose last week, while distillate and gasoline inventories are expected to have declined, according to a preliminary Reuters poll.
