China travel boom underpins oil prices
2024-02-20
Summary:
Asian oil prices held steady Tuesday, near three-week highs, amid rising Middle East tensions and rebounding Chinese demand.
Oil prices were little changed in early Asian trading on Tuesday, hovering near their three-week highs on heightened Middle East tensions and recovering China demand.
The Iran-backed Houthi militant group on Sunday damaged a ship offshore Yemen, prompting its crew to abandon the vessel in the latest escalation of maritime tensions that have disrupted key trade routes in the Red Sea.
Tourism revenues in China surged 47.3% year-on-year and rose above pre-Covid levels during the Lunar New Year holiday. The country cut a key reference rate for mortgage loans to stabilise property market.
However, the IEA report last week revised the 2024 oil demand growth forecast downward on expectations that renewable energy would supplant fossil fuel consumption.
According to the agency, oil markets could be in surplus all year as global demand growth loses steam. Meanwhile, OPEC+ members are implementing supply cuts.
Russia almost reached its target for voluntary supply reductions for the first time since making the pledge last year, according to Bloomberg calculations. Saudi Arabia also ditched its plan to raise output to 13 million bpd.
Brent crude looks neutral below the $83 level where sellers are lurking. It might need to hold above the SMA 50 to gain more positive momentum, or else it will likely drop back below $80.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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