Oil prices saw a modest increase on Tuesday, recovering from earlier losses as the market searches for a clear direction. Despite the rise, the overall sentiment remains one of caution, caught between tired bulls and hesitant bears. Trading volumes are expected to be light throughout the day, largely due to the Veterans Day holiday in the United States, which has kept many traders on the sidelines. Investors are now looking ahead to key monthly reports for fresh guidance on the trajectory of global demand.
Prices Rebound in Midday Trading
Following a slight dip in early trading, oil prices successfully turned positive as the day progressed. A barrel (159 litres) of North Sea Brent crude for January delivery climbed 66 cents, settling at $64.72. Meanwhile, the US benchmark West Texas Intermediate (WTI) for December delivery also firmed, adding 63 cents to reach $60.76. This contrasts with the previous day’s close, where crude prices finished Monday almost unchanged, although gasoil, a key refined product, slipped by nearly ten dollars to $751 per tonne.
US Holiday and Budget Hopes
Market activity was notably subdued. With the US holiday, thinner than usual volumes are anticipated at the exchanges as many traders hold back. In the background, political developments in Washington provided a hint of cautious optimism. The US Senate has cleared the way for a temporary budget. If the House of Representatives concurs in the coming days, it could provisionally end the longest government shutdown in US history, though market participants remain circumspect about its immediate impact on energy demand.
Focus Shifts to Supply Data
At present, investors are primarily waiting for new forecasts on global crude oil demand to find a clearer direction. Wednesday’s monthly report from the Organization of the Petroleum Exporting Countries (OPEC) is being closely watched. This report comes after OPEC and its allies, known collectively as OPEC+, have recently implemented increases to their production quotas.
Nevertheless, concerns about a potential oversupply continue to weigh on the market. Bears point out that high production volumes are still being reported from both the US and Canada. There is a persistent view that even a US budget compromise will be insufficient to absorb this potential supply glut, especially if the upcoming monthly reports from OPEC, the EIA, and the IEA once again predict a surplus.
Heating Oil Prices Lag Behind Crude Movements
This market indecision is also affecting downstream product prices, particularly heating oil. In Germany, domestic heating oil prices, which had fallen sharply the previous day, ticked higher again on Tuesday morning, averaging around 96 cents per litre. This apparent contradiction is largely attributed to market lag; price movements on the major exchanges always affect domestic prices with a slight delay. Consequently, the recovery seen in gasoil—the precursor product for heating oil—during yesterday’s trading is still filtering through, even as futures have already dipped again this morning.
Similar slightly firmer trends were observed in Austria and in Switzerland, although the overall momentum appears to be flattening. Consumers who need to fill their tanks soon are advised to monitor developments closely, as small fluctuations are likely, but a clear downward trend has yet to materialise.