By Yuka Obayashi and Siyi Liu
TOKYO/SINGAPORE (Reuters) -Oil prices fell on Tuesday as the top U.S. diplomat renewed efforts to push for a ceasefire in the Middle East and as slowing demand growth in China, the world’s largest oil importer, continued to weigh on the market.
Brent crude futures for December delivery fell 19 cents, or 0.3%, to $74.1 a barrel at 0350 GMT. U.S. West Texas Intermediate crude futures for November delivery were 18 cents lower at $70.43 a barrel on the final day of the front-month contract.
The more actively traded WTI futures for December, soon to become the biggest month, lost 14 cents, or 0.2%, to $69.9 a barrel.
Both Brent and WTI closed almost 2% higher on Monday, recouping some of last week’s decline of more than 7%, with fighting in the Middle East showing no signs of letting up and the market still nervous about Israel’s expected retaliation against Iran, which could potentially lead to a disruption of oil production. delivery.
Monday’s gains could be attributed to technical profit-taking and short-covering given oil’s bearish trend, with forecasts pointing to softer demand and oversupply in oil markets, said Priyanka Sachdeva, senior analyst at Phillip Nova, a brokerage firm.
US Secretary of State Antony Blinken headed to the Middle East on Monday to revive talks to end the Gaza war and defuse the spillover conflict in Lebanon.
“Crude oil prices have fluctuated in response to mixed news from the Middle East as the situation alternates between escalation and de-escalation,” said Satoru Yoshida, commodities analyst at Rakuten Securities.
“The market is expected to rise as there are clearer signs of China’s economic recovery, supported by Beijing’s stimulus measures and the improvement in the US economy following interest rate cuts,” he said. But gains are likely to be limited by continued uncertainty about the overall global economic outlook, he added.
China cut interest rates on Monday as expected at the monthly setting, following cuts to other policy rates last month as part of a stimulus package to revive the economy.
The move comes after data on Friday showed China’s economy grew at its slowest pace in the third quarter since early 2023, fueling growing concerns about oil demand.
China’s oil demand is expected to remain weak in 2025 despite Beijing’s recent stimulus measures as the world’s second-largest economy electrifies its car fleet and grows at a slower pace, the head of the International Energy Agency said on Monday.
Still, Saudi Aramco is “fairly optimistic” about Chinese oil demand, especially in light of the government’s stimulus package aimed at boosting growth, the head of the state oil giant said on Monday.
Also contributing to the downward pressure on the oil market was the strength of the US dollar, driven by a gradual easing in global inflation, said Phillip Nova’s Sachdeva.
A stronger dollar normally weighs on oil prices because it makes purchasing the dollar-priced commodity more expensive for non-dollar holders.
U.S. crude oil inventories likely rose last week, while distillate and gasoline inventories fell, a preliminary Reuters poll showed on Monday.
(Reporting by Yuka Obayashi in Tokyo and Siyi Liu in Singapore; Editing by Sonali Paul and Lincoln Feast.)
