© Reuters
Investing.com — Oil prices crept higher Monday, supported by the continued Middle East tensions, but gains are limited amid persistent concerns that crude demand will slow in the coming months.
By 09:00 ET (14.00 GMT), the futures traded 0.3% higher at $73.50 a barrel and the contract climbed 0.3% to $78.82 a barrel.
Supply disruptions provide support
The crude benchmarks recorded gains last week as the continued violence in the Middle East renewed concerns of supply disruptions from this oil-rich region.
The war between Israel and Hamas in Gaza rages on, the Yemen-based Houthi militants continue to threaten shopping into the Gulf of Aden, a crucial artery for shipping between Europe and Asia, while Iran and Pakistan are now in violent conflict.
Elsewhere, Ukraine allegedly carried out a drone attack on a Russian fuel export terminal over the weekend. Russian energy company Novatek said it had been forced to suspend some operations at the site due to a fire, Reuters reported.
Additionally, monthly reports from both the and the , released last week, pointed to healthy demand growth in 2024.
Demand concerns remain prominent
However, gains have been limited by concerns over a near-term slowdown in demand, with signs of a sluggish economic recovery in China being a major point of contention. The world’s largest oil importer saw underwhelming growth in the fourth quarter.
European growth is also difficult to find, while severe cold weather across the U.S. caused more disruptions and also limited travel in large parts of the country, pointing to weaker demand in the world’s largest fuel consumer. This notion was also exacerbated by a string of weekly builds in U.S. oil product inventories.
Central banks, key economic readings awaited
Traders were now waiting on several major central bank meetings and economic readings over the coming weeks for more cues.
The is set to meet on Tuesday and is widely expected to maintain its ultra-dovish policy. But analysts warned of any potential hawkish surprises from the BOJ, especially any changes to its yield curve control policies.
The is set to meet later this week and is likely to reiterate its higher-for-longer outlook for interest rates, which bodes poorly for economic activity in the bloc. The euro zone is already grappling with a recession in its biggest economies, amid dwindling economic growth.
Fourth-quarter U.S. data is also on tap later this week, and will be closely watched for cues on the world’s largest fuel consumer.
Strength in the U.S. economy gives the Federal Reserve more headroom to keep interest rates higher for longer- a scenario that is expected to weigh on economic activity and oil demand in 2024.
The is set to meet next week, and is expected to keep interest rates on hold.
(Ambar Warrick contributed to this article.)