Oil prices were little changed although the US reserve bid lends support By Reuters
By Yuka Obayashi and Emily Chow
TOKYO (Reuters) – Oil prices were little changed on Tuesday after falling in the previous session as the U.S.'s Strategic Petroleum Reserve (SPR) oil purchase program provided some support although broader concerns about weaker demand growth in the future weighed on it.
futures rose 3 cents to $71.45 a barrel at 0415 GMT, while US West Texas Intermediate crude was up 7 cents at $67.45 a barrel.
Both contracts fell 6% on Monday to their lowest since October 1 after Israel's retaliatory strike on Iran over the weekend overran Tehran's oil infrastructure. With signs that neither country appears likely to escalate the conflict after the attack, investor concerns about the potential for growth in global oil demand this year and next rose.
“Although the situation in the Middle East remains alarming, the market expects a temporary lull in the retaliatory strikes between Israel and Iran,” said Hiroyuki Kikukawa, president of NS Trading, a division of Nissan (OTC:) Securities.
“The US SPR replenishment program has provided some support to the market,” he said, but he predicted further declines as the peak winter kerosene demand period in the Northern Hemisphere is still far away while Chinese demand remains weak.
The United States on Monday said it wants up to 3 million barrels of oil for the SPR to be delivered by May next year, a purchase that will leave the government with little money to buy more until lawmakers approve more money.
On Saturday, dozens of Israeli warplanes completed three waves of strikes targeting missile factories and other sites near Tehran and western Iran, the latest exchange between the Middle East rivals.
The attacks were mostly aimed at military targets, allaying fears that Israel might attack Iran's nuclear facilities or oil infrastructure.
“The targeted response from Israel leaves the door open to a slowdown, which will allow fundamentals to once again become the dominant driver in the market,” ING Economics analysts said in a report, adding that fundamentals are expected to continue until 2025. .
Tensions in the Middle East remain high, however, as Iranian Foreign Ministry spokesman Esmaeil Baghaei said on Monday that Iran would “use all available tools” to respond to Israel's attack over the weekend.
The United States has warned Iran in the United Nations Security Council of “severe consequences” if it does any more aggressive actions against Israel or US personnel in the Middle East.
In the US, gasoline stocks may have risen last week, while distillate stocks were lower, Reuters' first poll said on Monday.
Industry group the American Petroleum Institute is scheduled to issue a weekly report on Tuesday and the Energy Information Administration, the statistics arm of the US Department of Energy, will issue one on Wednesday. [EIA/S] [API/S]
