Oil prices declined on Tuesday, reversing part of the near 2% gain seen in the previous session, as renewed U.S. diplomatic efforts to broker a ceasefire in the Middle East eased some war-related supply fears.
In addition, concerns over weak demand from China, the world’s largest oil importer, continue to weigh on the market.
By 2:20 pm AEDT (3:20 am GMT), Brent crude futures for December delivery had fallen by 35 cents, or 0.4%, to $73.96 per barrel, while U.S. West Texas Intermediate (WTI) crude for November delivery dropped by 26 cents, or 0.4%, to $70.30 per barrel.
Both Brent and WTI saw gains of nearly 2% on Monday, recouping some of the over 7% losses suffered last week as market jitters persisted over potential disruptions in oil supply due to the ongoing conflict between Israel and Iran.
U.S. Secretary of State Antony Blinken travelled to the Middle East on Monday in an attempt to revive negotiations to end the Gaza war and mitigate spillover conflicts in Lebanon.
Meanwhile, economic concerns over China’s oil demand persist. On Monday, China cut its benchmark lending rates as part of a broader stimulus effort aimed at reviving its sluggish economy.
Despite these efforts, the country’s economic growth in Q3 2023 was the slowest since early 2023, stoking fears of long-term weakening demand for oil.
The International Energy Agency (IEA) has forecast that China’s oil demand growth will remain subdued into 2025, driven by the electrification of its vehicle fleet and slower overall economic expansion.