Oil prices are recovering today from a recent plunge to five-month lows on Friday, driven primarily by a shift in market sentiment.
This relief rally was fuelled by retreating concerns over a potential escalation of trade tensions between the US and China after the US administration adopted a softer tone over the weekend.
At the same time, strong Chinese customs data showed September crude imports rising to approximately 11.5 million barrels per day (b/d), indicating healthy demand and potentially supporting the market.
However, this upward momentum could continue to face headwinds. The market’s narrative could remain dominated by ample supply and a weak global macroeconomic outlook. Projections of record-high US crude production, expected to hit 13.53 million b/d, contribute to concerns of an oversupplied market in addition to OPEC+ output increases.
The recent easing of geopolitical tensions in the Middle East weighed on prices as well. Markets could remain attentive to the geopolitical developments in the region.
