Oil prices rebounded in Asian trading on Tuesday after falling more than 3 percent in the previous session, as supply concerns triggered by conflict in the Middle East offset bleak data from China.
December Brent crude futures due Tuesday were up 65 cents, or 0.74%, at $88.10 a barrel by 06:37 GMT. Heavier-traded January Brent crude futures rose 63 cents, or 0.73%, to $86.98.
West Texas Intermediate crude (WTI) rose 67 cents, or 0.81%, to $82.98.
Oil fell on Monday as investors remained cautious ahead of Wednesday’s Federal Reserve meeting despite escalating Israeli attacks on Gaza.
While İsrael launched a ground attack, it withdrew very quickly, and Iran now only resorts to verbal deterrence. If this turns into a full-scale invasion and Iran intervenes, tighter supply concerns will come to the fore. Disruptions to Iranian oil flows remain the most significant risk to the market.
Prices rebounded on a technical correction early Tuesday and the market’s rise now depends on whether Israel expands its ground offensive.
Although developments in the Middle East have not yet affected oil supply, such supply loss could range from 500,000 barrels per day (bpd) to 1 million bpd if the US strictly enforces sanctions once again.
Weaker-than-expected manufacturing and non-manufacturing activity data in China increased fears that fuel demand in the world’s No. 2 oil consumer would slow down.
The official purchasing managers’ index missed forecasts and fell below the 50-point level that separates contraction from expansion.
Prices gained some support on concerns about prospects for crude oil exports from Venezuela due to election uncertainty.
The Supreme Court’s decision to suspend the results of this month’s opposition presidential primary elections raises questions about whether the United States will continue to ease sanctions against Venezuela.
There is talk of the US easing sanctions in return for the promise of fairer elections in 2024.
Markets are closely following Wednesday’s U.S. central bank meeting, although there is a good chance interest rates will remain steady.