Oil prices remained steady on Tuesday as the prospect of additional supply in the market amid lackluster global demand growth offset concerns that escalating conflict in the Middle East could disrupt exports in the main producing region.
Brent oil futures for December delivery rose 13 cents, or 0.18 percent, to $71.83 a barrel by 0050 GMT. West Texas Intermediate crude oil futures for November delivery gained 11 cents, or 0.16%, to $68.28 a barrel.
Oil markets have been under pressure due to weaker-than-expected demand growth this year, particularly in China, the world’s largest crude importer. Those demand concerns were reinforced Monday by data showing the country’s manufacturing activity contracted for the fifth month in September.
On Monday, Brent crude futures ended September down 9%, marking the third month of decline and the biggest monthly fall since November 2022. It fell 17% in the third quarter, recording thus its biggest quarterly loss in a year. WTI fell 7% last month and 16% during the quarter.
Despite concerns over demand, escalating tensions between Israel and the Islamic militant group Hezbollah in Lebanon have increased the risk that Iran, a key oil producer and member of the Organization of the Petroleum Exporting Countries (OPEC) which supports the militia, is directly involved in the conflict and possibly disrupts oil exports from the region.
The Israeli army has begun limited, localized and targeted raids against Hezbollah targets in the southern Lebanon border area, it said in a statement early Tuesday.
However, major producers are expected to increase production before the end of the year.
“Crude oil was little changed as traders took stock of the outlook amid growing tensions in the Middle East,” ANZ analysts said in a note.
“The risk of supply disruptions in the Middle East is offset by the prospect of increased production from OPEC. Despite its efforts to stabilize the oil market, prices have remained under pressure,” they said. added.
OPEC+, which brings together OPEC members and their allies such as Russia, is expected to increase production by 180,000 barrels per day in December.
U.S. crude oil and fuel inventories are expected to have fallen last week by about 2.1 million barrels in the week ending September 27, according to a preliminary Reuters poll.
The poll was conducted ahead of the release of a report from industry group American Petroleum Institute scheduled for 4:30 p.m. EDT (2030 GMT) on Tuesday.
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