Geopolitical Tensions Lift Crude Oil Price Amid Weak Demand

Crude oil futures in Asian trading hours on Tuesday were nudging higher but broader macroeconomics and energy fundamentals continued to pull in opposite directions. Front-month Nov24 ICE Brent futures were trading at $74.57/b (0355 GMT), compared to Monday's settle of $73.90/b.

Petroleum Price

  • Crude oil futures in Asian trading hours on Tuesday were nudging higher but broader macroeconomics and energy fundamentals continued to pull in opposite directions.
  • Front-month Nov24 ICE Brent futures were trading at $74.57/b (0355 GMT), compared to Monday's settle of $73.90/b.
  • At the same time Nov24 NYMEX WTI was trading at $71.12/b, versus Monday's settle of $70.37/b.
  • MCX Crude oil prices opened at 5969 with a gain of 1.20%.

Petroleum Demand and Supply

  • The latest North Atlantic weather system which formed in the southern Caribbean was redesignated from Invest 97L to Tropical Cyclone Nine on Monday, but is widely expected to be upgraded to Storm Helene later Tuesday.
  • Most models have a Florida landfall, avoiding the Louisiana energy hub, but a powerful storm could pass over oil and gas facilities lying offshore, forcing a number of operators including Shell and Chevron to start evacuation procedures of platform personnel.
  • Meanwhile, Israel this week stepped up attacks aimed primarily at Hezbollah targets in southern Lebanon, prompting fears of a wider escalation of the conflict.

Petroleum News

  • Oil markets were still reeling after the latest negative indicators from Europe, underscoring that the continent's manufacturing sector is languishing in recession.
  • Germany, the largest economy in the bloc, saw manufacturing slump to 40.3, below the August reading of 42.4 and the a mean forecast of 42.3. This marked the weakest level in a year, whereas the 50 mark separates expansion from contraction.
  • US business PMIs were more upbeat, but raised the prospect of further inflationary fears as prices for goods and services increased at the fastest pace in six months.
  • Elsewhere, China has taken steps to boost the country's beleaguered property sector, increasing housing affordability.
  • The People's Bank of China Gov. Pan Gongsheng on Tuesday announced that Beijing would cut the interest rates on existing individual mortgages by an average of 0.5%, while lowering the down-payment ratio for second homes purchases to 15% from 25%.

Expert Opinion

The commodity is drawing some support from resurfacing geopolitical tensions, as last week’s attacks on Israel are prompting stern warnings from the country’s prime minister and the international community. Further production concerns could bring more gains for crude oil, although traders are also wary of weak demand conditions.