Oil Prices Steady Amid Geopolitical Tensions and Economic Outlook

Oil prices steadied in Asian trade on Tuesday after rising sharply in recent sessions, as traders seek more cues from the U.S. presidential election and a significant political meeting in China.

Oil surged on Monday after the Organization of Petroleum Exporting Countries and allies (OPEC+) delayed plans to increase production this year, suggesting a tighter market outlook.

Despite recent gains, oil prices remained near three-year lows reached earlier this year. Markets are anxious about slowing demand, particularly in China, the top importer.

Heightened tensions in the Middle East have provided limited support to crude prices, especially as Iran reportedly prepares for a missile strike against Israel, while Israel continues its offensive against Hamas and Hezbollah.

Brent oil futures for January fell 0.2% to $74.93 a barrel, and West Texas Intermediate crude futures fell 0.2% to $70.90 a barrel by 20:02 ET (01:02 GMT).

China NPC Meeting in Focus for More Stimulus Cues

The Standing Committee of China’s National People’s Congress, the country’s most powerful political body, began a four-day meeting on Monday.

The NPC is anticipated to approve increased government fiscal spending, especially after Beijing announced several measures to support economic growth.

However, specifics about the size or scale of the planned measures remain unclear, as only the NPC can authorize additional fiscal spending. Recent reports indicate that China may approve approximately $1.4 trillion in increased debt over the upcoming years.

Concrete stimulus measures from China are likely to bolster oil markets, given that China is the world’s largest crude importer. Concerns about slowing demand from China continue to exert downward pressure on oil prices.

US Elections and Fed Meeting Awaited

Markets are also monitoring developments in the U.S. as the presidential election approaches on Tuesday. Recent polls indicate a close race between Donald Trump and Kamala Harris, with the final outcome uncertain.

Following the elections, attention will shift to a Federal Reserve meeting, where a 25 basis point interest rate cut is widely expected.

These events are poised to provide insights into the world’s largest fuel consumer, particularly with demand likely to decrease as winter approaches.