Oil prices rose slightly on Tuesday after falling 6% in the previous session, the US plan to buy oil for the Strategic Petroleum Reserve (SPR) provided some support. However, broader concerns about future weaker demand growth weighed on the downside.
Brent crude futures rose 63 cents, or 0.88%, to $72.05 a barrel by 0847 GMT, while WTI crude rose 58 cents, or 0.86%, to $67.37 a barrel.
On Monday, both contracts fell to their lowest levels since Oct. 1 after Israel’s weekend retaliatory strike on Iran did not target Tehran’s oil infrastructure.
With signs of attack escalation by both countries, investors are concerned about slowing global oil demand growth this year and next.
In case no Iran’s countermove, Israel is likely to limit its operations to proxies rather than Iran itself until next week’s U.S. vote.
This is a watered-down, world-fooling play that aims to revive the war economy, where the actors do what is expected of them but receive no applause.
Still, tensions in the Middle East remain high. Iranian Foreign Ministry spokesman Esmaeil Baghaei said on Monday that Iran would “use all available means” to respond to Israel’s weekend attack!
And, the U.S. warned Iran at the United Nations Security Council that it would face “severe consequences” if it took further aggressive action against Israel or U.S. personnel in the Middle East.
The U.S. signaled on Monday that it would buy up to 3 million barrels of oil for the SPR by May next year. The purchase will leave the government with little money to buy more until lawmakers allocate more funds.
With the peak winter fuel demand season in the Northern Hemisphere still some way off and demand in China remaining subdued, bearish sentiment is likely to follow.
A survey showed that U.S. crude and gasoline inventories likely rose last week, while distillate inventories fell.
The American Petroleum Institute (API) is scheduled to release its weekly report on Tuesday, and the Energy Information Administration (EIA), the U.S. Department of Energy’s statistical arm, will release its report on Wednesday.