Crude Oil Prices Struggle Amid Weak Chinese Data and Libyan Supply Disruptions
Oil prices saw a modest rise on Tuesday but remained near two-week lows, weighed down by weak economic data from China and rising temperatures that reduced the demand outlook for crude.
Market Movements and Key Prices
Brent crude futures rose by 35 cents, or 0.45%, to $77.43 per barrel by 0930 GMT. Similarly, U.S. West Texas Intermediate (WTI) crude futures gained 30 cents, or 0.41%, to $73.47. Despite the slight recovery, Brent closed at its lowest point since January 9 on Monday, while WTI hit its lowest since January 2.
Libyan Disruptions Supporting Prices
Providing some support to prices was a disruption at Libya’s Es Sidra oil port, where local protests blocked a tanker from loading crude on Tuesday. Engineers from the site confirmed the disruption, which could jeopardize the National Oil Corporation’s current production estimate of 1.4 million barrels per day if unrest spreads.
“Disorder in Libya’s oil sector is not unusual and often risks disrupting output,” said John Evans, an analyst at oil brokerage PVM.
China’s Economic Slowdown Fuels Demand Worries
On the downside, China’s unexpected contraction in January manufacturing activity has deepened concerns over the global demand for crude oil. As the world’s largest crude importer, weaker Chinese economic performance casts uncertainty over oil demand growth.
IG analyst Yeap Jun Rong noted, “The cautious risk environment, compounded by weaker Chinese PMI data, undermines optimism for China’s oil demand recovery.”
Adding further pressure, U.S. sanctions on Russian oil trade are expected to reduce China’s crude supply. Analysts at FGE estimate that independent refineries in Shandong province could lose up to 1 million barrels per day due to bans imposed by the Shandong Port Group on U.S.-sanctioned tankers.
Several Chinese refineries have already halted operations or scheduled indefinite maintenance periods due to the impact of new tariffs and tax policies, which have further hurt profitability, according to sources.
U.S. Weather Trends and Broader Market Influences
In the United States, forecasts for warmer-than-normal temperatures are also dampening demand for heating fuels like natural gas and diesel. This follows a spike in heating fuel prices earlier in January, driven by extreme cold weather.
Meanwhile, broader financial markets faced turbulence from the increasing interest in DeepSeek, a Chinese firm’s low-cost artificial intelligence model, which has disrupted U.S. tech stocks. However, these broader market dynamics have had a limited impact on the oil market.
Policy Uncertainty Adds to Market Jitters
Oil markets remain cautious as traders await clarity on the impact of U.S. policies involving tariffs and sanctions. Ashley Kelty, an analyst at Panmure Liberum, highlighted ongoing uncertainty, stating, “There is still time for the implications of U.S. policy decisions to play out.”
The combination of supply disruptions, weak demand signals from China, and evolving geopolitical policies continues to create a volatile landscape for crude prices.
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