Oil prices rose on Tuesday after falling 6% in the previous session, as a U.S. plan to buy oil for the Strategic Petroleum Reserve provided some support, although broader concerns about weaker future demand growth pressured.
Brent crude futures rose 74 cents, or 1.04%, to $72.16 a barrel, while U.S. West Texas Intermediate crude rose 68 cents, or 1%, to $68.06 a barrel.
On Monday, contracts fell to their lowest levels since Oct. 1 after Israel’s retaliatory strike on Iran over the weekend overtook Tehran’s oil infrastructure.
With signs that neither country seems likely to escalate the conflict after the attack.
investor concerns about weak global oil demand growth for this year and next have risen.
Declining oil demand from China, the world’s largest crude oil importer, has been a hindering global oil consumption and prices.
BP CEO Murray O’Nickelos told Reuters global refining margins were dismal as global oil demand growth remained below average due to slowing economic activity in China.
Oknicklaus added that demand will return to normal growth rates after Chinese President Xi Jinping introduces new stimulus measures to the economy.
Harry Chilingwieran, head of the research group at Onyx Capital Group, said: “After Israel’s retaliation, the risks of events faded.
leaving the oil market in the face of macroeconomic realities. China, where industrial profits are falling, will be in the lead and center”
However, tensions in the Middle East remain high. Iranian Foreign Ministry spokesman Esmail Baqaei said on Monday that Iran would “use all available tools” to respond to Israel’s attack over the weekend.
Brent crude rises amid tax concerns and rising savings
Brent crude rose 1.6% to $72.54. This is due to “traders’ hope for more Chinese stimulus (which has not been confirmed) and the hope that the Saudis will not raise production until the end of the year – given that there is already a supposed global surplus.” If Trump wins and “opens the taps — get ready for more oil to hit the markets” and lower prices, he says.
While Paul Deals said below that budget concerns don’t seem to affect consumers, Sarah Coles, head of personal finance at Hargreaves Lansdown, said that “concerns about potential budget tax increases have pushed savers to cash out individual savings accounts in huge numbers”, attracting £31.8bn since April.
with £3.9bn added to savings last month.
“Talking a lot about bigger tax bills has focused people’s minds on the savings they can make with individual cash savings accounts.
“At the same time, the prospect of freezing income tax limits for a longer period means more people are moving to higher tax brackets.
so savers are concerned that they may be exposed to tax bills on their savings.
But she noted that “the pendulum may have swung again when we get the numbers for October” within a month.
with banks increasingly focusing on increasing deposits through accessible accounts.
which protect them from interest rate risk if the balance sheet suffers from inflation.
On Monday that U.S. crude oil and gasoline inventories likely rose last week, while distillate inventories fell.
The American Petroleum Institute Industry Group is scheduled to release a weekly report on Tuesday and the Energy Information Administration, the statistical arm of the U.S. Department of Energy, will release a report on Wednesday.
Global commodity prices expected to fall amid rising oil
Global commodity prices are expected to fall to a five-year low next year thanks to a huge oil surplus.
the World Bank said on Tuesday, citing oversupply and steady demand from China. ” oil supply is expected to exceed demand next year by 1.2 million barrels per day,” the bank said in its latest report on global commodity markets.
adding that this range of oversupply had only been exceeded twice, in 1998 and 2020.
The bank said the expected oil surplus was “so large that it is likely to limit price effects even in the event of a wider conflict in the Middle East.” He blamed the projected oversupply in part on the ongoing “big shift” in China.
where demand for oil has stalled on the back of rising sales of electric vehicles.
demand for LNG-powered trucks and slowing industrial production.
The bank said it also expects several non-OPEC countries or its allies (OPEC+) to “increase oil production,”.
increasing supply and helping to reduce global commodity prices by about 10 percent by the end of 2026. But despite the sharp decline.
overall commodity prices are likely to remain about 30 percent above their level in the five years leading up to the COVID-19 pandemic.
World Bank chief economist Endremet Gill said in a statement: “Lower commodity prices and improved supply conditions can provide a buffer against geopolitical shocks.” “But they will do little to ease the pain of high food prices in developing countries.
where food price inflation is twice the normal rate in advanced economies.” The World Bank expects food prices to fall by nine percent this year.
and by an additional four percent in 2025.