Oil prices stabilize, dollar weakens and markets turn positive

Oil prices steadied on Tuesday following their biggest surge in over five weeks, as a weaker dollar and a positive sentiment in global markets helped support prices.

Brent traded above $73 a barrel after surging 3.2% on Monday, while West Texas Intermediate was near $69, News.Az reports, citing foreign media.

A gauge of the dollar held a two-day drop, making commodities priced in the currency less expensive for most buyers, and Asian shares followed Wall Street higher.

Oil is still lower for the year as concerns around Chinese demand and plentiful global supply weigh on the outlook. The prompt spread for WTI — the difference between the two nearest futures contracts — traded in a bearish contango structure on Monday for the first time since February.

The International Energy Agency has forecast a potential surplus of more than 1 million barrels a day next year as Chinese demand continues to falter, which could be even bigger if OPEC+ decides to revive output.

“We remain bearish on oil in the mid- to long-term,” said Zhou Mi, an analyst at the Chaos Research Institute in Shanghai. “OPEC+’s planned output increases and China’s demand peaking” raises the prospect for a global glut, he added.

In the Middle East, meanwhile, Lebanon and the Hezbollah militia have agreed to a US proposal for a cease-fire with Israel, according to a report from Reuters on Monday, which cited a top Lebanese official. A US official cautioned that negotiations were ongoing.

News.Az