Oil prices rose by more than 1% on Tuesday. This bounce came after a drop the day before, as traders took advantage of lower prices and a technical rebound. The earlier drop was caused by OPEC+ deciding to speed up oil production. However, worries about having too much oil in the market remain.
Brent crude futures rose 92 cents to $61.15 a barrel by 0309 GMT, while US West Texas Intermediate crude added 89 cents to $58.02 a barrel.
Both benchmarks had settled at their lowest since February 2021 on Monday, driven by an OPEC+ decision over the weekend to further speed up oil production hikes for a second consecutive month.
“Today’s slight rebound in oil prices appears more technical than fundamental,” said Yeap Jun Rong, a market strategist at IG. “Persistent headwinds including a pivotal shift in OPEC+ production strategy, uncertain demand amid US tariff risks, and price forecast downgrades are continuing to weigh on the broader price movement.”
Driven by expectations that production will exceed consumption, oil has lost over 10 per cent in six straight sessions and dipped over 20 per cent since April when US President Donald Trump’s tariff shocks prompted increased bets on a slowdown in the global economy.
The return of Chinese market participants after a five-day public holiday since May 1 was seen supporting prices on Tuesday.
“China also reopened today, and being the largest importer, buyers would have likely jumped to secure oil at current low levels,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
Also lending some support was data showing a pick-up in services sector’s growth in the US, the world’s major oil consumer, as orders increased.
Barclays lowered its Brent crude forecast on Monday by $4 to $70 a barrel for 2025 and set its 2026 estimate at $62 a barrel, citing “a rocky road ahead for fundamentals” amid escalating trade tensions and OPEC+’s pivot in its production strategy.
