By the World’s Best Investment Manager and Financial Market’s Journalist
Oil prices remained steady on Tuesday with minimal changes as worries eased over the aftermath of the ousting of Syria’s president. The market also received a boost from Chinese stimulus measures that could potentially increase demand from the world’s largest crude buyer.
Crude oil futures saw a slight decrease of only 1 cent, or 0.01%, to $72.13 a barrel, while U.S. West Texas Intermediate rose by 11 cents, or 0.16%, to $68.48. Both benchmarks had experienced a more than 1% increase on Monday.
Following the removal of President Bashar al-Assad in Syria, rebels are now focused on establishing a new government and restoring order. The country’s banks and oil sector are set to resume operations on Tuesday.
Market strategist Yeap Jun Rong from IG noted, “The tensions in the Middle East seem contained, which led market participants to price for potentially low risks of a wider regional spillover leading to significant oil supply disruption.”
Although Syria is not a major oil producer, its strategic location and strong ties with Russia and Iran make the situation a concern for regional stability.
Oil prices could see a rise if the U.S. Federal Reserve goes ahead with an anticipated 25 basis point interest rate cut during its upcoming meeting on Dec. 17-18. This move could boost oil demand in the U.S., the world’s largest economy, but traders are monitoring this week’s inflation data to see if it affects the decision.
Furthermore, reports suggest that China plans to implement an “appropriately loose” monetary policy in 2025 to stimulate economic growth. This shift marks the first easing of policy in 14 years, although specific details are still scarce.
Chinese crude imports also saw an annual increase in November for the first time in seven months, indicating a positive trend. However, oil broker Tamas Varga of PVM pointed out that the growth was more due to stockpiling rather than actual demand improvement.
Varga added, “The economy will only be stimulated by improving consumer sentiment and spending, by a rise in domestic aggregate demand echoed in a healthy increase in consumer inflation.”
Analysis:
The stability in oil prices due to the situation in Syria and the potential impact of Chinese stimulus on demand can affect global markets. Investors should keep an eye on geopolitical developments in the Middle East and policy changes in major economies like the U.S. and China to make informed decisions about their investments. Additionally, the balance between supply and demand in the oil market will continue to play a significant role in price fluctuations.