Oil Futures Rebound on Middle East Tensions and China Demand Concerns
Oil futures made a strong comeback, surging over $1 a barrel from seven-week lows on Wednesday following the assassination of Hamas leader Ismail Haniyeh in Iran. The Middle East tensions escalated, but concerns about weak China demand continued to weigh on prices.
Brent Crude and WTI Prices Rise
Brent crude futures rose by $1.39, or 1.8 percent, to reach $80.02 a barrel ahead of expiry on Wednesday. Meanwhile, the more active October contract was trading at $79.41, up $1.34. US West Texas Intermediate crude futures also saw an increase of $1.38, or 1.9 percent, to hit $76.11 a barrel.
Heightened Tensions in the Middle East
The assassination of Hamas leader Ismail Haniyeh in Iran and the Israeli government’s claim of killing Hezbollah’s senior commander in Beirut on Tuesday have intensified tensions in the Middle East. Diplomatic efforts to prevent further escalation are ongoing amidst the latest conflicts in the region.
Concerns Over China Demand and OPEC+ Deal
Despite the rebound in oil prices, concerns about China’s weakening demand outlook and uncertainties surrounding OPEC+ production cut agreements persist. Top ministers from OPEC+ are set to meet on Thursday to discuss the current market situation.
Impact of China’s Economic Slowdown
China’s manufacturing activity continued to shrink for the third consecutive month in July, signaling a slowdown in the world’s largest crude oil importer. The protracted property crisis and job insecurity in China are expected to prompt further stimulus measures from Beijing.
US Inventory Data and Market Expectations
In the US, crude inventories, gasoline, and distillates recorded a decline last week, according to reports from the American Petroleum Institute. Analysts are awaiting the Energy Information Administration’s data release to gain further insights into the market trends.