Oil prices have risen, supported by optimistic economic signals from China and the US, despite a backdrop of geopolitical tensions involving Iran and the Houthis. US crude settled below $68 a barrel amidst concerns regarding trade disruptions and potential supply reconfigurations. Goldman Sachs has revised oil demand forecasts downward while anticipating some short-term price recovery.
Oil prices increased for the second consecutive session, buoyed by encouraging economic signals from China and the United States, two primary crude consumers. West Texas Intermediate gained 0.6%, settling below $68 per barrel, amidst a report indicating a moderate slowdown in US retail sales, contrary to fears of a drastic decline. Meanwhile, China announced plans aimed at stabilizing its stock and real estate markets, enhancing wages, and improving birth rates, as reported by Xinhua.
Geopolitical tensions escalated with US President Donald Trump labeling maritime attacks by Yemen’s Houthis as direct provocations by Iran. This came after Defense Secretary Pete Hegseth indicated that US strikes against Houthi targets would be relentless until they cease assaults on vessels in the Red Sea. Dennis Kissler, a senior vice president at BOK Financial Securities, remarked that these tensions could pull major short sellers back into the market, resisting at a moving average of $68.56.
Investment speculation has emerged, with one fund taking an options position equivalent to 20 million barrels, betting that escalating conflicts in the Middle East could drive Brent’s price towards $100. Despite the gains, crude has dropped over $10 from its January peak due to Trump’s tariff strategies, OPEC+’s raised production quotas, and the potential resolution of the Ukraine war, which could reintegrate Russian oil into the market as negotiations with President Vladimir Putin are forthcoming.
Oil futures are currently in a bullish backwardation pattern, demonstrating solid supply and demand dynamics, where shorter contracts hold a higher value than longer ones. However, the outlook remains clouded; Goldman Sachs Group Inc. revised its Brent crude forecasts downward due to Trump’s trade confrontations, which are projected to adversely affect global growth and oil demand. Nonetheless, Goldman indicated that prices could see modest recovery in the near term due to the resilience of the US economy and persistent sanctions on Russia.
In summary, oil prices have risen due to positive economic developments from China and the US, alongside increasing geopolitical risks associated with US-Iran tensions. Despite the recent price dip, market sentiment suggests a potential for modest recovery driven by sustained economic resilience in the US and unchanged sanctions on Russia. Nonetheless, analysts remain cautious due to the impact of ongoing trade tensions on global oil demand.
Original Source: www.rigzone.com
