Oil Ticks Higher on Better China Demand as Glut Concerns Persist
(Bloomberg) -- Oil edged higher from the lowest level in almost two months on better Chinese demand as glut concerns hang over the market.
Brent inched toward $62 a barrel and West Texas Intermediate was near $58 in thin trading ahead of the Christmas and New Year holidays. China’s apparent oil demand and refining activity in November were higher than a year earlier, but other monthly figures signaled weakness in the broader economy.
Oil is set for an annual loss on expectations for a swelling surplus as OPEC+ and other producers add more barrels despite soft demand growth. Concerns about the glut are showing up in the key Middle Eastern crude market, though geopolitical uncertainty has injected some risk premium into prices.
Ukraine continues to attack Russian energy facilities, hitting a major refinery as well as an oil depot over the weekend, seeking to reduce the revenue that helps Moscow fund its war. US President Donald Trump has dispatched envoys to Berlin for another round of talks and try and end the conflict.
Elsewhere, Iran said it seized a foreign tanker in the Gulf of Oman it suspected of carrying smuggled fuel, while the US intercepted a vessel off Venezuela last week as Trump ramps up pressure on the regime of Nicolas Maduro. The American president has vowed US strikes on drug cartels on land.
“The geopolitical premium hasn’t disappeared, it’s just being crowded out by the glut narrative for now,” said Charu Chanana, chief investment strategist at Saxo Markets in Singapore. “Geopolitics are acting more as a floor than a catalyst for a sustained breakout in price.”
The aggregate volume of Brent’s traded contracts was below the daily average, meaning price moves will likely be amplified, leading to a choppy market.
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