Oil prices were steady on Tuesday as traders assessed concerns over China’s rebound outlook and potential supply disruptions driven by ongoing geopolitical conflicts in Russia and the Middle East.
Global benchmark Brent crude oil futures for August delivery slightly eased 0.12% to $85.91 per barrel, while the US West Texas Intermediate (WTI) crude futures rose 0.09% to $81.70 per barrel.
Both were trading near their highest since May. Still, their strong run has been curbed by a fairly solid performance from the US dollar and as traders await further cues on the potential direction of the Federal Reserve’s interest rates.
Oil prices have gained in recent sessions due to a possible demand boom in the summer as travel is expected to accelerate during the season.
Doubts on China Recovery Offset Oil Supply Concerns
Recovery prospects in China, the world’s top oil consumer, have increasingly become a significant concern among traders, with the latest challenge weighing on the near-term outlook for Chinese retailers.
Data from a Beijing-based retail data provider showed in the previous week that the combined gross merchandise volume (GMV) of companies during China’s annual 618 e-commerce shopping festival slipped 7% from last year to CN¥742.8 billion ($102.3 billion).
That marked the first time sales declined during the mid-year online sales event, signaling consumers’ caution over spending amid the ongoing property crisis, limited wage increase, and elevated youth unemployment rate.
Muted consumer spending dents the possibility of the world’s second-largest economy hitting its expansion target of about 5% this year.
With uncertainty over China’s economic rebound in focus, continued concerns about supply disruptions due to escalating tensions in Russia and the Middle East have been kept in check.
Israel carried on with its air strikes on Gaza on Monday while its armored tanks entered the city of Rafah further.
Medic personnel stated that there were about 11 Palestinian casualties in Israel’s latest aerial assault aimed at aid supplies in Gaza, while Israeli military forces also pushed deeper into the southern Rafah area and reentered the city’s northern parts, which they seized several months earlier.
On the Russia-Ukraine war, Ukrainian President Volodymyr Zelensky said they had struck more than 30 Russian oil refineries, terminals, and depots in their latest move to damage Russia’s major oil-producing infrastructure.
European Union (EU) countries have also approved the 14th package of sanctions against Russia, which would prohibit re-exporting the country’s liquefied natural gas (LNG) to third countries through European waters.
