Oil prices bounced back on Tuesday after the International Monetary Fund (IMF) increased its global petroleum growth forecast. Meanwhile, the market braces for impending US retaliation for the deadly drone attack by Houthi militants on Sunday.
The US West Texas Intermediate (WTI) crude oil March futures advanced 1.35% to $77.82 per barrel on January 30. However, analysts anticipate a 0.37% slide to $77.53 a barrel due to short-term profit-taking in the coming market session.
On Sunday, Houthi forces launched an unmanned drone at a US logistics base in Jordan, killing three American service members. In response, US Defense Secretary Lloyd Austin vowed fierce retaliation at a time and place of their choosing.
Traders feared that a large-scale attack by US forces on Houthi may cause Iran’s involvement, significantly escalating the conflict. National Security Council spokesperson John Kirby eased the speculation, saying the US does not plan to provoke Iran.
The International Monetary Fund (IMF) revised its oil growth forecast for this year to 3.10%, 0.20% higher than its October prediction. It cited the surprisingly strong US economy as the primary driver for the demand surge.
In addition, the American Petroleum Institute (API) reported a draw of 2.50 million barrels in the week ending January 26. It exceeded the projected shortfall of 0.87 million barrels but was lower than the 6.67 million deficit the week before.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies will meet online on February 01. However, insiders claimed it would be for monitoring purposes and does not involve plans to decide on policy.
IMF Offset Worries of Falling Oil Demand in China
Petroleum shed an upwardly adjusted 1.58% on Monday after a court-ordered liquidation of Evergrande sparked a property crisis in China. As the world’s top black gold importer, the Chinese economy significantly influences global fuel prices.
The world’s second-largest economy struggled in 2023, and Evergrande’s collapse is expected to add heavy pressure in the short term. Economists predict creditors will recover almost nothing of the property developer’s $300 billion debt.
Industry experts said a crash in China’s property sector is inevitable as any authority stimulus would be insufficient. Still, the IMF report estimates that soaring oil demand in the US and other locations will be enough to compensate for potential shortcomings.
