WTI crude oil futures climbed to around $67.8 per barrel on Monday, extending gains from the previous session, as optimism over China’s stimulus measures and rising geopolitical tensions fueled bullish sentiment in the oil market.
Oil gains on China stimulus, Red Sea tensions
Beijing unveiled a new set of initiatives on Sunday aimed at boosting consumption, including efforts to raise household incomes and establish a childcare subsidy program to encourage spending. These measures reinforced expectations of stronger demand from China, the world’s top crude importer. Additionally, China’s better-than-expected economic data, released on Monday, signaled further recovery momentum, easing concerns about sluggish industrial activity and weak energy demand.
Meanwhile, investors remained on edge over potential supply disruptions following the U.S. military’s continued strikes on Yemen’s Houthis. The Biden administration reaffirmed its commitment to targeting the group until attacks on Red Sea shipping cease, raising concerns over energy security and global trade disruptions.
Ukraine war effect on energy market
Adding to oil’s upward momentum, diminishing prospects for a swift resolution to the war in Ukraine continued to cloud the outlook for Russian energy supplies to Western markets. While U.S. President Donald Trump and Russian President Vladimir Putin are expected to hold talks this week in an attempt to broker a ceasefire, analysts remain skeptical about an immediate breakthrough that could ease Western sanctions on Russian oil exports.
Elsewhere, expectations of tighter market conditions were supported by ongoing production cuts from OPEC+ nations, with traders closely watching any signals of further supply adjustments in the upcoming OPEC+ meeting. All eyes are also on the U.S. Federal Reserve’s policy decision this week, as any signals on interest rates and economic growth could impact crude demand expectations.
