Oil retreats as economic concerns overshadow geopolitical tensions

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ETF

Obligations

Oil costs fell in early trading on Tuesday as concerns about the outlook for global oil demand offsetting geopolitical tensions in the Middle East and considerations following an attack on a Russian fuel export terminal over the weekend.

Brent crude futures fell 14 cents, or 0. 2%, to $79. 92 a barrel by 0125 GMT, while U. S. West Texas Intermediate (WTI) crude futures. They were down 10 cents, or 0. 1%, at $74. 66 a barrel.

Both contracts had risen about 2% on Monday when a Ukrainian drone strike on Novatek’s fuel export terminal in Ust-Luga prompted considerations about sources and pushed up costs. Analysts say Novatek will likely resume full-scale operations there within a few weeks.

Although damage to loading docks at the Ust-Luga terminal “had only a brief effect on exports,” the move raises the prospect of a war between Russia and Ukraine “entering a new phase in which the parties aim to key energy infrastructure,” ANZ Research analysts said in a statement. note.

The geopolitical tensions have been eclipsed by persistent concerns over China’s stuttering economic recovery, which has in turn raised worries about global oil demand given the Asian giant is the world’s biggest crude oil importer.

Chinese authorities have put in place a number of measures for the economy, but domestic consumption remains tepid, leaving oil investors worried about the outlook.

In the Middle East, the U. S. called on Israel to exonerate others in hospitals, medical staff and patients as Israeli forces stormed one hospital and laid siege to another as they moved into Gaza’s western Khan Younis.

U.S. and British forces have also carried out a fresh round of strikes targeting a Houthi underground storage site and missile and surveillance capabilities used by the Iran-aligned Houthi group.

Houthi attacks on ships in and around the Red Sea region have disrupted shipping and stoked inflation fears. The organization said its attacks were in solidarity with Palestinians as Israel advances toward Gaza.

Separately, a Reuters vote showed U. S. crude oil inventories are expected to fall to around 3 million barrels in the week leading up to Jan. 19. Distillate inventories are expected to decline last week, while gas inventories are expected to increase.

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