Oil Prices Rise on Signs of Improved Demand and Escalating Middle East Tensions
Positive Start in Asian Trading
Oil prices saw an uptick in early Asian trading on Tuesday, supported by indications of increased demand and rising tensions in the Middle East. This surge came after U.S. futures hit a five-month high in the previous session.
Market Movement and Analysis
June delivery futures climbed by 37 cents to $87.79 a barrel, with the May contract for U.S. West Texas Intermediate (WTI) crude futures rising by 32 cents to $84.03 a barrel. Analyst Tony Sycamore attributed this growth to stronger-than-expected manufacturing data from the U.S. and China.
Impact of Manufacturing Data
Both China and the U.S. reported an expansion in manufacturing activity in March, signaling a potential rise in oil demand. China, being the world’s largest crude importer, and the U.S., the biggest consumer, play significant roles in the oil market dynamics.
Future Projections
Sycamore suggested that U.S. futures could reach the mid-$90s if they surpass a technical resistance level of $84.00 a barrel. The last time WTI contracts hit $95 per barrel was back in August 2022.
Geopolitical Developments
In the Middle East, an Israeli strike on Iran’s embassy in Syria resulted in casualties, including senior military commanders. This incident raised concerns about potential disruptions in oil supply, given the ongoing conflict in the region.
Upcoming OPEC Meeting
The Organization of Petroleum Exporting Countries (OPEC) is scheduled to hold an online meeting to review market conditions and member compliance with output cuts. Members are expected to maintain their current supply policy, aiming for voluntary output cuts of 2.2 million barrels per day until the end of the second quarter.
“The market has not shown concern about supply disruptions so far, but with Iran’s involvement, there could be risks to its oil supply,” noted analysts from ANZ, highlighting the potential impact of geopolitical tensions on the oil market.
