US LNG exports surge but will buyers in China turn up?
Investing.com--Oil prices rose Tuesday, rebounding after logging steep losses over the past week on concerns over increased supplies under US President Donald Trump, as well as doubts over long-term demand.
At 08:30 ET (13:30 GMT), Brent oil futures expiring in March rose 1.1% to $77.00 a barrel, while West Texas Intermediate crude futures gained 1.2% to $74.08 a barrel.
Middle East disruptions
Helping crude prices rise Tuesday was a disruption of oil loading operations at Libya's Es Sidra port.
Local protesters prevented a tanker from loading oil on Tuesday at Es Sidra, two engineers from the facility told Reuters.
"Despite the recent weakness in the oil market, the Middle East market continues to show relative strength with its unusual premium to Brent widening to more than US$2/bbl," said analysts at ING, in a note.
"While the Middle Eastern market has been strengthening since late last year, it is since US sanctions against Russia that we have seen a much more meaningful move, with buyers of Russian oil looking for alternatives. Although oddly, despite sanctions on a large part of the Russian shadow fleet, tanker rates have been weakening more recently."
Trump energy plan, OPEC comments dent crude
However, oil prices have dropped some 5% in the past week, with losses coming after Trump declared a national energy emergency and called for a ramp-up in U.S. production.
While analysts doubted the move would increase near-term oil supplies, Trump’s plans do herald an eventual increase in US oil output, which already averaged at record highs of over 13 million barrels per day in 2024.
Trump also called on the Organization of Petroleum Exporting Countries to increase production and to bring down oil prices.
Oil markets were also on edge over Trump’s plans to impose trade tariffs on major economies, especially China. Any more economic headwinds for China are expected to further dent the country’s appetite for crude.
"Tariff headlines will also not be helping sentiment with reports that President Trump will place tariffs on steel, aluminium and copper imports. In addition, the Financial Times reports that Treasury Secretary Scott Bessent is pushing for a universal import tariff of 2.5%, which will be raised gradually," ING added.
China PMIs, DeepSeek spur demand fears
Oil prices were also hit by concerns over softer energy demand on the prospect of more efficient artificial intelligence models, after the release of China’s DeepSeek R1.
The model claims to match competitors such as ChatGPT in performance at a fraction of the cost and processing power.
DeepSeek raised questions over just how much investment and expansion in data center infrastructure was justified. Fewer data centers point to lower energy demand.
Oil was also pressured by softer-than-expected Chinese purchasing managers index data, which showed local business activity was slowing despite recent stimulus measures from Beijing.
(Ambar Warrick contributed to his article.)
Weak economic data from top importer China sparked doubts over long-term demand for crude, as recent stimulus measures from Beijing appeared to have provided fleeting support to the economy.
Chinese markets are closed for the week-long Lunar New Year holiday.
Crude prices were also hit by a broader risk-off move in financial markets, with losses in equities- on concerns over a disruptive new artificial intelligence model from China- spilling over into other markets.