Oil prices rose following a weekly loss as broader market sentiment turned positive, although lingering concerns about China’s demand outlook and ample global supply continue to weigh on the market.
Brent crude climbed above $71 a barrel, recovering from a 3.8% drop last week, while West Texas Intermediate (WTI) hovered near $67. The rise in oil prices coincided with a rebound in Asian stock markets and a positive movement in commodities. A weaker U.S. dollar also provided some relief to buyers of raw materials priced in the currency.
Since mid-October, oil prices have fluctuated between gains and losses, influenced by geopolitical tensions, particularly in the Middle East, where fears of an escalation have raised concerns about potential supply disruptions. However, weak demand from China has dampened oil sales, including December shipments of Angolan crude, while forecasts from agencies like the International Energy Agency (IEA) point to the possibility of a substantial supply glut in 2025.
“Market participants are still uneasy about the prospects of higher supply from the U.S. and OPEC+, coupled with the uncertain outlook for China’s economy,” said Jun Rong Yeap, market strategist at IG Asia Pte. “There are not many bullish factors driving oil prices at the moment.”
Investors are also keeping a close eye on the ongoing war in Ukraine, as international allies pressure President Volodymyr Zelenskyy to explore new avenues for negotiating with Russian President Vladimir Putin. Additionally, the U.S. is reportedly close to making a decision to lift some restrictions on Ukraine’s use of Western-made weapons, allowing for limited strikes on military targets in Russia, according to sources familiar with the matter.
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