BEIJING: Oil prices were little changed in early trading on Tuesday as global growth concerns, U.S. tariffs and Russia-Ukraine ceasefire talks offset increased instability in the Middle East that could impact supply.
Brent futures ticked up 10 cents, or 0.14%, to $71.17 a barrel by 0135 GMT, while U.S. West Texas Intermediate crude futures rose 7 cents, or 0.1%, to $67.65 a barrel.
“Fundamentally the economic uncertainties overshadow geopolitical tensions,” said independent market analyst Tina Teng.
“China’s positive data needs to be sustained to gain market confidence as the global demand outlook is still weak amid tariffs and ceasefire talks for the Ukraine war.”
On Monday, Chinese economic data showing that retail sales growth quickened in January-February gave investors reasons for optimism, although factory output fell and the urban jobless rate reached its highest in two years.
Prices also continued to gain support from President Donald Trump’s vow to continue the U.S. assault on Yemen’s Houthis unless the group ends its attacks on ships in the Red Sea.
Meanwhile, talks on Tuesday between Trump and Russian President Vladimir Putin about ending the Ukraine war were in focus. Markets believe a potential peace negotiation would involve the easing of sanctions on Russia and the return of Russian crude supply to global markets, weighing on prices.
Highlighting ongoing concerns about demand, the other key downside risk for oil, the OECD said on Monday that Trump’s tariffs would drag down growth in the US, Canada and Mexico, which would weigh on global energy demand.
“With global supply surging and tariffs and trade wars set to hit global demand, we remain of the view that prices will head lower and eventually reach the mid $60s,” said Robert Rennie, head of commodity and carbon strategy at Westpac.
Further adding to global supply, Venezuela’s state-run PDVSA has put together three operational scenarios indicating it plans to continue producing and exporting oil from its joint venture with Chevron after the U.S. major’s licence expires next month, according to a company document reviewed by Reuters on Monday.
In the Middle East, Lebanon and Syria agreed on a ceasefire, their defence ministries said in statements on Monday, after cross-border clashes left 10 dead in the past two days.
Syria is not a major oil producer, but its regime change had raised concerns about further instability in the Middle East.
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