Market Analysis

Oil prices rose early on Tuesday, continuing their climb from the previous session due to a more optimistic demand outlook and speculation that OPEC+ might halt or reverse its plans to increase production later this year.

Brent crude futures, the global benchmark, increased by 21 cents to $84.46 per barrel at 0001 GMT. U.S. West Texas Intermediate crude futures also rose by 16 cents to $80.49 per barrel, reflecting a gain of around 2% on Monday, marking their highest levels since April.

Last week, confidence in oil demand growth for the latter half of the year was bolstered by reports from OPEC, the International Energy Agency, and the U.S. Energy Information Administration, all predicting a decline in stockpiles.

Investor confidence has been recovering since OPEC+ surprised the market with its announcement to begin boosting production in October, buoyed by expectations of stronger future demand that are supporting current prices.

In the financial markets, hedge funds and other major investors bought the equivalent of 80 million barrels in key petroleum futures and options contracts over the past week, partly reversing the 194 million barrels sold in the immediate aftermath of the OPEC+ decision.

Geopolitical tensions in the Middle East are also supporting prices, with concerns about potential disruptions to global oil supplies arising from conflicts such as the Israel-Hamas war in Gaza and tensions along the Israel-Lebanon border involving Hezbollah.

Meanwhile, the U.S. military reported destroying several Houthi radars, an unmanned surface vessel, and a drone in the last 24 hours amid ongoing clashes in Yemen, where Iran-aligned Houthi rebels have targeted vessels in solidarity with Palestinians in Gaza.

Paraphrasing text from "Reuters" all rights reserved by the original author.