Oil prices remained stable on Tuesday despite the potential for increased supply entering the market and concerns about the escalating conflict in the Middle East disrupting exports. Brent futures for December delivery rose by 0.18% to $71.83 a barrel, while U.S. West Texas Intermediate crude futures for November delivery increased by 0.16% to $68.28 a barrel.
The oil market has been facing challenges due to weaker-than-expected demand growth, especially in China, the world's largest crude importer. Recent data showing a decline in China's manufacturing activity for the fifth consecutive month in September has further reinforced these demand concerns.
Although Brent futures saw a 9% decrease in September, marking its third consecutive monthly decline, and WTI fell by 7%, the tensions between Israel and Hezbollah in Lebanon have raised the possibility of Iran being drawn into the conflict, potentially disrupting oil exports from the region.
Despite these concerns, major oil producers are planning to increase their output by the end of the year. OPEC+ is set to raise output by 180,000 barrels per day in December, which could help stabilize the market.
Analysts at ANZ noted that while there is a risk of supply disruptions in the Middle East, the prospect of production hikes from OPEC is offsetting these concerns. Additionally, oil and fuel stockpiles were expected to have decreased by about 2.1 million barrels in the week ending September 27, according to a Reuters poll conducted on Monday.
Overall, the outlook for oil prices remains uncertain as the market navigates between demand worries and geopolitical tensions in the Middle East. Investors should keep a close eye on developments in the region and production decisions by major oil-producing countries to make informed decisions about their investments.
