Oil prices increased on Tuesday over positive demand outlook in the US and China, the world’s biggest oil consumers, and possible rate cuts by the US Federal Reserve (Fed), while intensified Israeli strikes in the Middle East reinforced supply concerns in the region.
The international oil benchmark of Brent crude increased 0.65% to $72.22 per barrel at 11.29 a.m. local time (0829 GMT), up from the previous session’s close of $71.75.
The US benchmark West Texas Intermediate also rose by 0.70% to $68.38 per barrel, compared to $67.90 at the prior session’s close.
Donald Trump, who was re-elected as the US president, is expected to impose trade tariffs after taking over the administration in January.
Analysts expect Trump’s business-friendly policies to boost economic growth and corporate profits in the world’s biggest crude consuming country.
China, the world’s biggest crude importer, is expected to be affected by the tariffs. Though, the economic incentive rhetoric by Pan Gongsheng, the governor of the People’s Bank of China (PBoC), eased concerns in the markets.
Gongshan underlined his plans to assist economic growth via a supportive monetary policy amid a possible trade war with the US next year.
Latest data in China also raised expectations that economic activity in the country will improve amid continued support from Beijing.
This week’s US employment data is expected to have an impact on the US Federal Reserve’s (Fed) interest rate decision.
Analysts anticipate that low interest rates will stimulate economic activity and increase oil demand in support of higher oil prices.
According to the pricing in the money markets, there is a 75% probability that the Fed will make a 25 basis point reduction in the monetary policy during the bank’s meeting on Dec. 18.
Tension heightened in the Middle East as the Israeli army continues to attack targets despite cease-fire agreement.
The Israeli army announced Tuesday that it bombed dozens of missile platforms belonging to Hezbollah in Lebanon.
As a result of the attacks in the south of Lebanon, six days after the cease-fire agreement, 2 people, including a government official, died, many people were injured, and one Lebanese soldier was injured in the attack on Hirmil in the northeast of the country.
