Oil prices saw a slight rebound on Thursday, following a sharp drop to a six-month low the day before. However, concerns about weakened demand in the United States and China continue to trouble investors.
At 0924 GMT, Brent crude futures rose by 76 cents, or 1 percent, reaching $75.06 a barrel. Similarly, U.S. West Texas Intermediate crude futures saw a 1 percent increase of 67 cents, bringing the price to $70.05 a barrel.
PVM Oil analyst John Evans pointed out that the pressure on oil prices persists due to China, the largest global importer of oil, reducing its demand for crude. Meanwhile, the United States, the largest producer, continues to maintain high output levels.
According to analysts at ANZ, in the previous session, the market was shaken by data indicating that U.S. output remains close to record highs, despite a decrease in inventories.
The International Energy Agency (IEA) also addressed concerns about the potential impact of reduced demand from China on global oil markets. The agency stated that global oil demand may fall in the first quarter of 2022 due to sluggish economic recovery in China.
The ongoing tensions between Russia and Ukraine further contribute to the volatility in the oil market. A potential conflict in the region raises concerns about disruptions in oil supply from the world’s top exporter, Russia.
The oil market is closely monitoring geopolitical developments that could impact supply and demand dynamics. Any escalation in tensions in the Middle East, a major oil-producing region, could further disrupt oil markets and lead to price fluctuations.
Despite the current concerns, some analysts remain optimistic about a potential rebound in oil prices. They believe that as COVID-19 related restrictions ease, global economic activity will pick up, driving increased demand for oil.
Despite market uncertainties, the oil industry continues to closely follow developments surrounding the Iran nuclear deal negotiations. If an agreement is reached, Iranian oil exports could potentially flood the market, exerting downward pressure on prices.
Investors are also keeping a close eye on the upcoming OPEC and its allies’ meeting. During the meeting, they will discuss production levels amid the ongoing supply and demand dynamics. Any decision to adjust production levels could significantly impact oil prices.
Amid ongoing market volatility and uncertainty, oil traders and investors are bracing themselves for potential price fluctuations. The situation remains fluid, and global events continue to influence the trajectory of oil prices.
