Vague Hopes For Middle East Peace Extend Oil's Losses

China's ongoing malaise also contributes to bearish sentiment: File Image/Pixabay

Oil on Tuesday extended its losses, albeit minimally, due to a report that Israel's prime minister Benjamin Netanyahu is considering a diplomatic solution to the war in Lebanon.

As of 1714 GMT, Brent was down 39 cents to $71.03 per barrel, and West Texas Intermediate declined 33 cents to $67.05 per barrel.

Axios reporter Barak Ravid said on X that Netanyahu will hold a meeting on Tuesday evening with several ministers and  military and intelligence community members about the prospect of a diplomatic solution to the war in Lebanon.

However, geopolitical risk remains, considering that Iran's foreign ministry stated the Islamic republic will "use all available tools" to respond to Israel's weekend attack – and Israel countered that if so, it will hit back with capabilities "we didn't even use last time."

Meanwhile, Andrew Lipow, president of Lipow Oil Associates, said of Tuesday's trading, "Markets tried to stage a modest recovery but continue to be under pressure from lacklustre demand from China and worries about increasing supply."

For his part, Daan Struyven, analyst at Goldman Sachs, told media that oil prices have become too cheap compared with fundamentals, and to support his case he cited demand from refilling the U.S. Strategic Petroleum Reserve as well as from the airline industry.

Struyven went on to say that risks are skewed to the downside next year, with soft demand in China, robust U.S. production, and the likelihood of the Organization of the Petroleum Exporting Countries (OPEC) bringing crude back to the market.

In other oil news on Tuesday, a survey by OilChem revealed that China plans to export 12.4 percent less refined petroleum products in November compared to this month.

Total fuel exports are scheduled at 2.54 million tons, of which 800,000 tons is of gasoline, 180,000 is of gasoil, and 1.56 million is of kerosene; the gasoline allocation is 3.9 percent higher than the October allocation, the gasoil exports are planned 28 percent lower than October, and kerosene exports will be 18 percent lower than October.

As for September exports, the total was 5.2 million tons, down by 4.5 percent on the year; of that, gasoline exports stood at 730,000 tons, down by 33 percent on the year.