Oil Gains Slightly On Mideast Risks, China Stimulus, Uncertain Ukraine Talks
Adedokun Waliyu
3 min read
Brent crude oil on Tuesday advanced slightly in its intraday trading as it positioned itself to attack the key resistance level at $71.35.
The gains were supported by instability in the Middle East, as well as China’s plans for more economic stimulus, though global growth concerns, U.S. tariffs and uncertainty over Ukraine ceasefire talks curbed gains.
An upward corrective trend in intraday levels and trading along a trendline is anticipated, with price boosted by continued positive momentum from trading above its 50-day simple moving average.
Moreover, the price rose after successfully offloading its overbought condition, as indicated by the RSI in previous sessions, according to an analysis by Economies.com.
“We expect Brent crude oil to gain further in the upcoming sessions, particularly if it manages to break the resistance at $71.35. Following a successful breakout, the next target is the resistance level at $73.60. This bullish outlook holds as long as the support at $70.00 remains intact,” it wrote.
“Along with U.S. strikes on the Houthis in Yemen, several factors provided support to the market,” ING analysts said in a research note.
“China unveiled plans to revive consumption, while Chinese retail sales and fixed asset investment growth came in stronger than expected.”
The state council, or cabinet, unveiled on Sunday a special action plan to boost domestic consumption, with measures such as boosting incomes and offering childcare subsidies.
On Monday, Chinese economic data showed that retail sales growth quickened in January-February, giving investors reasons for optimism, although factory output fell and the urban jobless rate reached its highest in two years.
Crude oil throughput in China, the world’s biggest crude importer, rose 2.1% in January and February from a year earlier, supported by a new refinery and Lunar New Year holiday travel, official data showed on Monday.
Oil prices gained support from President Donald Trump’s vow to continue the U.S. assault on Yemen’s Houthis unless they end their attacks on ships in the Red Sea. Trump said on Monday he would hold Iran responsible for any attacks carried out by the Houthi group that it backs in Yemen.
On the Israel-Palestinian conflict, Israeli air strikes in Gaza killed at least 200 people, Palestinian health authorities said, as attacks on Tuesday ended a weeks-long standoff over extending a ceasefire that halted fighting in January.
Highlighting persistent concerns about demand, a key downside risk for oil, the OECD said on Monday that Trump’s tariffs would drag down growth in the United States, Canada and Mexico, which would weigh on global energy demand.
“With global supply surging and tariffs and trade wars set to hit global demand, we remain of the view that prices will head lower and eventually reach the mid $60s,” said Robert Rennie, head of commodity and carbon strategy at Westpac.
Further adding to global supply, Venezuela’s state-run PDVSA has put together three operational scenarios indicating it plans to continue producing and exporting oil from its joint venture with Chevron after the U.S. major’s licence expires next month, according to a company document reviewed by Reuters on Monday.
Talks on Tuesday between Trump and Russian President Vladimir Putin about ending the Ukraine war were also in focus.
Markets believe a potential peace negotiation would involve the easing of sanctions on Russia and the return of its crude supply to global markets, weighing on prices.
