Middle East tensions, Chinese demand propel oil prices upward

February 20, 2024 (MLN): Global oil prices increased on Tuesday driven by heightened tensions in the Middle East and recovering demand in China.

Brent crude is currently trading at $82.84 per barrel, up by 0.23% on the day.

While West Texas Intermediate crude (WTI) is trading at $78.35 per barrel, up by 0.27% on the day.

Crude markets were "marginally lower" in "quiet trading over the Presidents' Day holiday in the U.S. and as demand concerns offset ongoing Middle Eastern geopolitical tensions," IG market analyst Tony Sycamore said in a note, as Reuters reported.

The Iran-aligned Houthis continued their attacks on shipping lanes in the Red Sea and Bab al-Mandab Strait, with at least four more vessels hit by drone and missile strikes since Friday.

"Signs of stronger demand in China also boosted sentiment," ANZ analysts wrote in a note.

Tourism revenues in China surged 47.3% year-on-year and rose above pre-COVID levels during the national Lunar New Year holiday that ended on Saturday.

China also cut a benchmark reference rate for mortgages by more than expected on Tuesday, in a bid to shore up its beleaguered property market and economy.

However, the price-supportive factors did not completely offset demand worries. A bearish International Energy Agency (IEA) report last week revised the 2024 oil demand growth forecast downward on expectations that renewable energy would supplant fossil fuel usage.

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