Oil prices dipped for the second consecutive session on Tuesday, retreating from last week’s rally as a stronger U.S. dollar and forecasts of ample supply weighed on market sentiment.
As of 01:48 GMT, Brent crude futures dropped by 28 cents (0.37%) to $76.02 per barrel, while U.S. West Texas Intermediate (WTI) crude declined by 33 cents (0.45%) to settle at $73.23 per barrel.
Both benchmarks had climbed for five straight days last week, closing at their highest levels since October, fueled by optimism over potential fiscal stimulus to revive China’s struggling economy. However, the momentum appears to be faltering.
“This week’s weakness likely stems from a technical correction, as traders respond to softer global economic data that undermines last week’s optimism,” noted Priyanka Sachdeva, a senior market analyst at Phillip Nova. She cited bearish economic signals from the U.S. and Germany as key factors dampening the outlook.
In addition to weaker economic data, the U.S. dollar’s persistent strength has pressured oil prices. The dollar, which remains near a two-year high, has benefitted from market uncertainty regarding tariff policies under the incoming Trump administration. A stronger dollar typically makes oil more expensive for buyers using other currencies, further curbing demand.
On the supply side, analysts highlight an anticipated balance in the market. Rising demand from non-OPEC nations, combined with subdued demand from China, is expected to maintain sufficient supply through 2025. This outlook has limited significant upward price movement in recent sessions.
“The rally in crude oil prices appears to be losing steam,” ING analysts stated in a research note. “While the physical market has seen some tightening, overall fundamentals for 2025 suggest ample supply, which should cap further gains.”
With mixed signals from global economic conditions and a robust supply outlook, market participants are treading cautiously as they navigate these contrasting dynamics.
