Oil prices were mixed on Tuesday, after posting losses the previous session, as broad economic concerns outweighed continued tensions in the Middle East that led to more tanker diversions.
Brent crude oil, against which Nigerian oil is priced, gained 3 cents, or 0.04% to settle at $78.15 a barrel in the early hours of Tuesday while the U.S. West Texas Intermediate oil was down 23 cents or 0.32% to close at $72.45 per barrel after a U.S. public holiday on Monday.
“Fears of weaker economic growth weighed on sentiment across the commodity complex. This was despite rising tensions in the Red Sea,” ANZ analysts said in a client note.
Asian shares dropped to a one-month low, U.S. stock futures fell and the dollar rose on Tuesday as hawkish remarks from central bankers tempered expectations for interest rate cuts, ahead of an economic outlook speech by the U.S. Federal Reserve’s Christopher Waller at 1600 GMT on Tuesday.
Some concerns over how China’s demand could pan out in the near-term after the country’s central bank left the medium-term policy rate (MLF) unchanged on Monday, also weighed on oil prices.
“Yesterday’s refusal of China’s central bank, PBoC, to enact a cut on its 1-year MLF rate has dampened the expectations of more pronounced stimulus measures from China’s top policymakers which in turn led to a weaker demand narrative for oil that capped further potential upside,” said OANDA’s senior markets analyst Kelvin Wong.
Meanwhile, extremely cold weather in the U.S. that could curb oil production and also affect major refinery operations was in focus as well, analysts said.
North Dakota oil production has already fallen by 400,000 to 425,000 barrels per day on extreme cold and related operational issues.
“At present, the wait-and-see sentiment in the oil market is relatively heavy, with the escalation of geopolitical conflicts offset by the (earlier) accumulation of inventory (in the U.S.),” said CMC Markets’ analyst Leon Li.
Official inventory data from the U.S. Energy Information Administration is expected on Thursday, delayed by one day this week due to the holiday on Monday.
In the Middle East, Yemen’s Houthi movement will expand its targets in the Red Sea region to include U.S. ships, an official from the Iran-allied group said on Monday, as it vowed to keep up attacks after U.S. and British strikes on its sites in Yemen.
More oil tankers were steering clear of the southern Red Sea on Monday due to the disruptions, increasing the cost of shipping and the time it takes to move oil from one place to another.
