Brent futures were up 6 cents, or 0.1%, to settle at US$71.89 a barrel, while US West Texas Intermediate (WTI) crude rose 8 cents, or 0.1%, to settle at US$68.12.
NEW YORK: Oil prices held near a two-week low on Tuesday after dropping about 5% over the past two sessions as investors absorbed Opec's latest downward revision for demand growth, a stronger US dollar and disappointment over China's latest stimulus plan.
Brent futures were up 6 cents, or 0.1%, to settle at US$71.89 a barrel, while US West Texas Intermediate (WTI) crude rose 8 cents, or 0.1%, to settle at US$68.12.
On Monday, both crude benchmarks settled at their lowest prices since Oct. 29.
"A normal tendency in crude following a sharp drop would be a recovery back to about the middle of the prior day's range within a couple of sessions," analysts at energy advisory firm Ritterbusch and Associates said in a note. Opec cut its forecast for global oil demand growth in 2024 and also lowered its projection for next year, marking the producer group's fourth consecutive downward revision.
The weaker outlook highlights the challenge facing Opec+, a group that includes the Organization of the Petroleum Exporting Countries and allies such as Russia. This month, the group postponed a plan to start raising output in December against a backdrop of falling prices.
"With China's demand remaining lackluster, supply-side tinkering by Opec is not having the desired impact other than to maintain the Brent price floor at $70," said Gaurav Sharma, an independent oil analyst in London.
Opec said world oil demand would rise by 1.82 million barrels per day (bpd) in 2024, down from growth forecast of 1.93 million bpd last month.
The group also cut its 2025 global demand growth estimate to 1.54 million bpd from 1.64 million bpd.
Opec remains at the top of industry estimates and has a long way to go to match the International Energy Agency's far lower view.
Opec's forecast on robust growth in China is "at odds with other forecasters, who have considerably reduced their end-2024 estimates on China's poor macroeconomic performance and disappointing fiscal stimulus," said Harry Tchilinguirian, head of research at Onyx Capital Group.
On Friday, China unveiled a 10 trillion yuan (US$1.4 trillion) debt package to ease local government financing strains. Republican former President Donald Trump, who won the Nov. 5 US presidential election, has threatened more tariffs on Chinese goods. Analysts said China's plan fell short of the amount needed to boost economic growth.
Another factor that could limit oil demand growth is the foreign policy team Trump is putting together. Trump is expected to tap US Senator Marco Rubio to be his secretary of state, sources said. Rubio has in past years advocated for a muscular foreign policy with respect to America's geopolitical foes, including China, Iran and Cuba.
"The foreign policy team (including possibly Rubio) is being brought in to tighten the screws on China, which will threaten oil demand growth from the largest oil importing country on the planet," Bob Yawger, director of energy futures at Mizuho, said in a report.
Also weighing on oil prices, the US dollar rose to a four-month high versus a basket of currencies as investors kept piling into trades seen benefiting from Trump's victory.
A stronger greenback makes oil more expensive in other countries, which can reduce demand. In Germany, the biggest economy in Europe, investor morale clouded over this month, an economic research institute said, as Trump's election and the collapse of the German government unleashed added uncertainty over Germany's already ailing economy.
Protectionist policies from the incoming US administration will hamper global growth and Europe must be better prepared than in 2018, European Central Bank policymakers said. — Reuters
