Oil Rises as China Plans Stimulus, U.S. Vows Pressure on Houthis
Oil rose for a second day after top importer China signaled more steps to revive consumption and a U.S. offensive against Yemen’s Houthis provided a reminder of the geopolitical risk premium that has largely left the market. Brent crude rose above $71 a barrel, following a 1% gain on Friday. Beijing plans steps to stabilize stock and real estate markets, raise wages and boost the country’s birth rate, state news agency Xinhua reported.
Meanwhile, U.S. strikes on Houthi sites ordered by President Donald Trump will be “relentless” until the Iran-backed militants stop targeting ships in the Red Sea, Pentagon chief Pete Hegseth said Sunday. Crude has fallen more than $10 a barrel from its highest point this year in January, as Trump’s escalating trade war, OPEC+’s decision to increase supply and a possible end to the war in Ukraine have all weighed on prices. The U.S. president is likely to speak with Russian leader Vladimir Putin this week, as Washington pushes for a deal to end the three-year conflict. Futures, however, remain in a bullish backwardation structure, with short-dated contracts priced higher than longer-dated ones. That signals some price support.
“Unless the demand prognosis is substantially downgraded and the backwardation in crude narrows or turns into contango, the dips remain attractive,” said Tamas Varga, an analyst at brokerage PVM. The declines provide “short-term buying opportunities in a scary macroeconomic environment.” The gloomy economic outlook prompted Goldman Sachs Group Inc. to lower its Brent crude forecast, analysts including Daan Struyven said in a note Sunday. The Wall Street giant also said oil demand growth will be weaker than previously expected as tariffs hurt global growth.
However, prices may recover “modestly” in the short term as the U.S. economy remains resilient, and sanctions on Russia show no signs of easing soon, Goldman said.
Source: Bloomberg
