Oil edged higher — after tumbling the most in more than a year in the previous session — as China announced a Saturday briefing on fiscal policy, with the market also monitoring developments in the Middle East.
Brent (BZ=F) rose toward $78 a barrel after tumbling 4.6% on Tuesday, and West Texas Intermediate (CL=F) traded above $74. China’s finance minister will introduce moves to strengthen fiscal policy to shore up growth and take questions from reporters, according to a notice from the government.
Oil was swept up in a broader market selloff on Tuesday after China’s top economic planner ended a briefing without major fresh stimulus. The slide in prices overshadowed nervousness about an escalation of hostilities in the Middle East, particularly a possible retaliatory strike by Israel on Iran’s oil facilities following a missile barrage last week.
President Joe Biden has discouraged Israel from targeting Tehran’s oil fields, and Iran continued exporting crude from its main Kharg Island terminal. Still, markets remained on edge, with options in a bias toward calls — where buyers profit when prices rise — and volatility soaring.
Oil is facing a tug-of-war between fundamentals indicating a surplus in 2025 and geopolitical tensions, said Priyanka Sachdeva, a senior market analyst at brokerage Phillip Nova Pte in Singapore. Bearish headwinds include a weak Chinese economy and a plan by OPEC+ to increase supply, she said.
Morgan Stanley raised its Brent price forecast by $5 to $80 a barrel for the fourth quarter of this year on heightened geopolitical risk, but warned of a widening surplus in 2025. Demand is weaker than expected and supply has been robust, analysts including Martijn Rats said in a note.
In the US, the American Petroleum Institute reported crude stockpiles expanded by 11 million barrels last week. However, inventories of gasoline and distillates — a category which includes diesel — each declined.
