Apr 16 2024: Oil prices stabilized on Tuesday, supported by positive data indicating faster-than-expected growth in China’s economy and ongoing tensions in the Middle East. However, concerns about persistently high U.S. interest rates and their potential impact on demand tempered gains.
China’s official GDP data for the first quarter showed a growth rate of 5.3%, surpassing analysts’ forecasts and signaling robust economic activity in the world’s largest oil importer.
Brent futures for June delivery edged up by 7 cents to $90.17 a barrel, while U.S. crude for May rose by 6 cents to $85.47 a barrel.
Despite the positive Chinese indicators, gains were limited by other economic factors, such as real estate investment figures, and stronger-than-expected U.S. retail sales data. These factors reinforced the view that the U.S. Federal Reserve is unlikely to rush into cutting interest rates.
Oil market sentiment remained cautious, with Tamas Varga from oil broker PVM highlighting the delicate balance between inflation concerns, Fed policy, and geopolitical tensions.
The recent escalation of tensions in the Middle East, triggered by Iran’s attack on Israel, initially pushed Brent prices to a six-month high of $92.18. However, prices retreated as the damage from the attack turned out to be less severe than feared.
Jorge León from Rystad Energy noted that while supply risks have eased for now and a swift military response from Israel appears less likely, uncertainty remains high, making predictions about future price movements challenging.
Iran’s President Ebrahim Raisi warned of potential retaliation against any actions affecting its interests, adding to the geopolitical complexities that could impact oil markets. Iran, as a major OPEC producer with a daily output exceeding 3 million barrels, holds significant influence over oil dynamics.
