Investing.com-- In Asian trade on Tuesday, oil prices saw a slight increase after a recent rebound, but concerns over mixed readings on business activity from around the world have caused some uncertainty.
Over the past two weeks, crude prices experienced a sharp rise due to optimism surrounding lower interest rates, helping them recover from near three-year lows. However, this upward trend has slowed down in recent sessions as various major economies reported middling business activity readings, raising worries about a potential slowdown in demand.
Crude oil futures expiring in November rose by 0.2% to $74.07 a barrel, while Brent crude rose by 0.3% to $69.82 a barrel by 20:40 ET (00:40 GMT).
Middling PMIs Stall Oil Rebound
Mixed Purchasing Managers Index (PMI) readings from the U.S., Euro Zone, and Japan have raised concerns about slowing manufacturing activity, which could lead to decreased demand for crude oil. While services PMIs have shown some resilience in overall business activity, the slowdown in manufacturing presents potential challenges for crude oil demand.
These middling PMIs have added to worries that oil demand will decrease as global economic conditions deteriorate in the coming months. However, oil bulls are optimistic that interest rate cuts by major central banks may help counteract this trend.
Middle East Tensions and Supply Disruptions Remain in Focus
Traders are still factoring in some risk premium to crude oil due to ongoing tensions in the Middle East. Recent events, such as Israel's bombing of Hezbollah-linked targets in Lebanon and the offensive against Hamas in Gaza, have heightened concerns about a potential escalation in the region.
Furthermore, the possibility of more supply disruptions in the Middle East has also contributed to the recent rebound in oil prices. In the U.S., attention is on tropical storm Helene, which is the second major storm to hit the Gulf of Mexico this month following Hurricane Francine.
Extended supply disruptions in the region could lead to a tighter outlook for U.S. oil markets, potentially boosting prices in the near-term.
Analysis:
In summary, recent fluctuations in oil prices can be attributed to a combination of factors, including mixed global business activity readings, ongoing tensions in the Middle East, and potential supply disruptions. Investors should monitor economic indicators, geopolitical developments, and weather patterns to assess the future direction of oil prices and make informed investment decisions.