Mumbai, 25 June 2024 (Commoditiescontrol):Oil prices remained largely stable on Tuesday due to concerns over China's economic recovery, despite supply worries linked to Middle East tensions and Ukrainian attacks on Russian refineries. Brent futures for August delivery rose slightly by 7 cents to $86.06 per barrel, while the more actively traded September contract increased by 8 cents to $85.23. U.S. crude futures climbed by 11 cents to $81.74 per barrel, continuing a two-week upward trend after a 3% rise last week.
The outlook for China's economic recovery has become increasingly uncertain. Retailers are struggling following a disappointing mid-year online shopping festival, with consumers hesitant to spend due to a real estate slump, stagnant wage growth, and high youth unemployment. This hesitation threatens China's economic growth target of around 5% for the year.
In the Middle East, Israeli airstrikes targeted aid supplies, resulting in at least 11 Palestinian casualties in Gaza, while Israeli tanks advanced deeper into Rafah. Internationally backed efforts for a ceasefire have yet to succeed.
In Ukraine, President Zelenskiy reported over 30 Russian oil facilities have been hit, including a recent drone attack on June 21 targeting four refineries. The EU has agreed on new sanctions against Russia, including a ban on reloading Russian LNG within the EU.
In the U.S., the San Francisco Federal Reserve Bank President stated that rate cuts should not occur until inflation is confidently on track to reach 2%, implying prolonged higher borrowing costs which could impact economic activity and oil demand.
A preliminary poll indicated U.S. crude oil stockpiles were expected to decrease by 3 million barrels, with gasoline stocks also anticipated to decline while distillate inventories were likely to rise.
Crude prices are unlikely to sustain current levels unless China's economy recovers.
(By Commoditiescontrol Bureau; +91-9820130172)
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