Oil prices found stability following the largest gain in over five weeks, supported by a weaker dollar and an overall positive market sentiment. Brent crude held above $73 per barrel, after soaring 3.2% on Monday, while West Texas Intermediate (WTI) hovered near $69. The dollar index was on track for a third consecutive day of losses, making oil and other commodities priced in the currency more affordable for international buyers. Asian stock markets also mirrored the upward movement seen on Wall Street.
Despite the recent rally, oil prices remain lower year-to-date, pressured by ongoing concerns over weak demand from China and ample global supply. The price spread for WTI, which represents the gap between the nearest two futures contracts, shifted into a bearish contango structure on Monday for the first time since February, signaling a potential oversupply.
The International Energy Agency (IEA) has warned that the global oil market could face a surplus of more than 1 million barrels per day next year, driven by weakening Chinese demand. This surplus could widen if OPEC+ proceeds with plans to ramp up production.
“We remain bearish on oil in the mid- to long-term,” said Zhou Mi, an analyst at the Chaos Research Institute in Shanghai. “The combination of OPEC+’s planned output increases and China’s demand peak raises the likelihood of a global oil glut,” he added.
Meanwhile, in the Middle East, Lebanon and Hezbollah have reportedly agreed to a U.S. proposal for a ceasefire with Israel. A senior Lebanese official confirmed the development, although U.S. officials have cautioned that talks are still ongoing.
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