Brent crude futures gained 17 cents to $78.16 a barrel, while U.S. West Texas Intermediate crude futures jumped 16 cents to $72.94
Oil prices rose on Tuesday as investors waited to see whether a Middle East trip by top U.S. diplomat Antony Blinken will bring a halt to the war in the region, which has raised concerns about supplies from the major producing region.
Brent crude futures gained 17 cents to $78.16 a barrel by 0704 GMT, while U.S. West Texas Intermediate crude futures jumped 16 cents to $72.94. Both contracts advanced nearly 1% on Monday, rising for the first time in four sessions.
The signs of de-escalation in the Middle East crisis are missing and continue to extend some support to ailing oil prices, said Phillip Nova senior market analyst Priyanka Sachdeva.
The US continued its campaign as attacks on shipping vessels have disrupted global oil trading routes.
Concerns about the demand outlook, however, limited price gains.
Analysts said expectations of “higher for longer” interest rates in the US and elsewhere would likely cap consumption, along with indications that China’s economy continues to struggle.
CMC Markets analyst Leon Li also said it would be “difficult to return to previous highs” given that a run of strong economic indicators out of the US would likely lose steam.
Layoffs are still increasing. This means that in the long term, the (oil) demand will decline, Li added.
On the supply side, market participants are awaiting industry data due later on Tuesday on U.S. crude stockpiles. Five analysts polled by Reuters estimated on average that crude inventories increased by nearly 2.1 million barrels in the week to February 2.
BMI analysts said in a client report that they expect the market will remain broadly balanced over the course of the year and that oil prices would increase a moderate 3.4%.