Oil prices rebounded from their lowest levels since February 2021 during Asian trade on Tuesday, as technical buying and renewed interest from returning Chinese market participants helped stabilise prices.
By 3:20 pm AEST (5:20 am GMT), Brent crude futures climbed $0.96, or 1.6%, to US$61.19 per barrel, while U.S. West Texas Intermediate (WTI) crude advanced $0.91, also up 1.6%, to US$58.04.
Both benchmarks had plunged on Monday following an OPEC+ decision to accelerate oil production increases for the second consecutive month, fuelling market fears about an emerging supply glut.
“The higher-than-expected rise in supply comes amid darkening clouds over the global economy,” ANZ analysts said in a note to clients. “President Trump’s trade war threatens to derail the economic growth that emerged late last year. This sets the scene for ongoing downward pressure for oil prices.”
Tuesday’s rebound was aided by the return of Chinese traders after a five-day Labour Day holiday, injecting fresh demand into the market.
Prices also drew support from data indicating a modest improvement in the U.S. services sector, with the Institute for Supply Management (ISM) reporting its Services PMI rose to 51.6 in April from 50.8 in March - contrary to forecasts for a dip to 50.6.
Still, concerns linger. The Federal Reserve is widely expected to keep interest rates unchanged on Wednesday, as policymakers assess the economic impact of ongoing trade uncertainties.
Adding to the cautious outlook, Barclays cut its Brent crude forecast by US$4 to US$66 per barrel for 2025 and projected US$60 for 2026, citing "a rocky road ahead for fundamentals" amid shifting OPEC+ policies and trade-related risks.
