Oil Prices Stall Amid Mixed Business Activity Reports

Oil Prices See Minor Increase Amid Mixed Economic Signals

Oil prices experienced a slight uptick in Asian trading on Tuesday, although the recent recovery appears to have lost momentum in light of varied reports on business activity globally.

Crude oil prices surged over the past two weeks, driven by optimism surrounding decreasing interest rates, which allowed them to recover from nearly three-year lows. However, this upward trend has stalled in recent trading sessions due to lackluster data on business activity from several major economies, raising concerns about potential declines in demand.

Brent crude futures for November delivery rose by 0.2% to $74.07 a barrel, while West Texas Intermediate crude increased by 0.3% to $69.82 a barrel as of 20:40 ET.

Economic Indicators Impact Oil Market

Recent mixed purchasing managers index (PMI) data from the U.S., eurozone, and Japan have sparked worries about a slowdown in manufacturing activity, potentially signaling reduced demand for crude oil. Although the growth in services PMIs showed some resilience in the overall business landscape, the looming manufacturing downturn could offer more obstacles for crude oil.

These mixed indicators contribute to concerns that oil demand may weaken as global economic conditions deteriorate in the coming months. Nonetheless, oil advocates are hopeful that interest rate cuts from major central banks could mitigate this trend.

Geopolitical Tensions and Supply Concerns Persist

Traders are still factoring in a risk premium for crude due to ongoing tensions in the Middle East. Recent military actions by Israel, targeting Hezbollah-linked positions in Lebanon, threaten to escalate conflicts further, alongside continued operations against Hamas in Gaza.

Fears of a broader conflict in the region have led oil traders to consider the possibility of significant supply disruptions, which also contributed to the oil price recovery in the past weeks.

Additionally, attention in the U.S. has shifted toward tropical storm Helene— the second major storm to impact the Gulf of Mexico this month, following Hurricane Francine’s passage through the oil-rich zone. Prolonged supply disruptions in this area may lead to a tighter market for U.S. oil, potentially resulting in price increases in the near future.