Oil up as Middle East tensions persist, demand concerns cap gains

Oil prices rose in Tuesday trade as geopolitical tensions in the Middle East continued to spur concern. Still, gains were limited on bearish demand sentiment and as the market waited for monthly reports from oil agencies, reported by Reuters.

Brent futures for May delivery were up 37 cents, or 0.4%, to $82.58 a barrel by 0656 GMT. The U.S. crude April contract rose 27 cents, or 0.3%, to $78.20 a barrel.

Capping gains, however, are the outlooks for weaker demand and increasing supply from producers outside of the Organization of Petroleum Exporting Countries (OPEC).

“Bearish demand sentiments and growing non-OPEC supply leave little room for the market to be bullish on oil prices at this time,” said Serena Huang, head of APAC analysis at Vortexa.

The International Energy Agency (IEA) expects oil supply to grow to a record high of about 103.8 million barrels per day, almost entirely driven by producers outside OPEC and its allies (OPEC+), including the United States, Brazil and Guyana.

Meanwhile, China’s crude oil imports rose in the first two months of the year versus the same period in 2023, but they were weaker than the preceding months, continuing a trend of softening purchases by the world’s biggest buyer.

In the meantime, the market is awaiting demand estimates from monthly reports by OPEC, the IEA and the Energy Information Administration, analysts from ANZ said in a note.

“While we believe the estimates will be largely unchanged, any upside surprise will ease demand concerns.”