Oil Prices Edge Up on U.S. SPR Purchase Plans Amid Demand Worries

Oil prices saw a modest recovery on Tuesday, buoyed by the U.S. government’s plan to purchase up to 3 million barrels for the Strategic Petroleum Reserve (SPR), yet concerns lingered over weaker global demand growth.

As of 10:26 GMT, Brent crude futures rose 1.04% to $72.16 a barrel, while U.S. West Texas Intermediate (WTI) increased 1% to $68.06 a barrel. This uptick followed Monday’s sharp 6% drop, marking a recovery after the market had absorbed news of Israel’s recent strike on Iran. Although this conflict has kept geopolitical tensions elevated, both countries appear unlikely to escalate further, which has softened any immediate supply concerns.

Weaker Demand Outlook from China and Europe
Demand concerns persist, particularly as China — the world’s largest oil importer — continues to experience slower growth, impacting global oil consumption and refining margins. BP CEO Murray Auchincloss attributed the demand slump to sluggish economic activity in China, but remained optimistic that stimulus measures from Chinese President Xi Jinping may revive demand to normal growth rates. European demand also remains weak, amplifying global supply concerns.

U.S. SPR Purchase and Inventory Insights
The U.S. government’s recent announcement to purchase oil for the SPR through May introduces a substantial buyer into the market, though analysts argue it may not be sufficient to offset pessimism around demand. The SPR purchase would require additional congressional funding for further stockpiling, according to analysts at PVM and BNP Paribas.

The American Petroleum Institute (API) and the Energy Information Administration (EIA) are expected to release their weekly inventory reports on Tuesday and Wednesday, respectively, which could further influence market sentiment. Early estimates suggest that U.S. crude and gasoline stockpiles may have risen last week, while distillate inventories likely fell.