Oil prices rise on Middle East tensions, gains capped ahead of reports
Oil futures edged higher on Tuesday as tensions in the Middle East lingered. However, gains were capped due to a bearish demand outlook and increasing non-OPEC supply. Brent crude futures for May delivery rose 0.6% to $82.69 per barrel, while US crude futures gained 0.5% to $78.33 per barrel.
Hopes of a ceasefire in the Israel-Hamas conflict have faded. Meanwhile, attacks by Yemen’s Houthis threaten to widen conflicts in the region.
While attacks haven’t significantly disrupted supply, concerns persist over tensions. However, analysts note that markets are growing accustomed to such attacks, with delayed shipments becoming the “new norm.”
In Russia, a Ukrainian attack started a fire at an LKOH refinery. Supply is set to rise further as non-OPEC outputs, led by the US, Brazil, and Guyana, grow.
The IEA expects a record non-OPEC supply of 103.8 million this year. Chinese imports rose in January-February but continued below previous months.
The market now awaits demand estimates from OPEC, IEA and EIA reports. While estimates are likely unchanged, an upside surprise could ease demand worries, say ANZ analysts. Bearish sentiment and rising non-OPEC supply weigh on bullishness for now.
