
Oil rose for a second session on optimistic economic signals from the two biggest consumers of crude, while US attacks on Yemen’s Iran-backed Houthis revived concerns about a wider confrontation in the Middle East.
West Texas Intermediate advanced 0.6% to settle below $68 a barrel after US retail sales showed a modest slowdown, rather than a precipitous drop as some had projected. Meanwhile, China plans measures to stabilize stock and real estate markets, lift wages and boost the nation’s birth rate, state-run news agency Xinhua reported.
Potentially rekindling the market’s geopolitical risk premium, US President Donald Trump said in a social media post that the administration will view maritime attacks by the Houthi militia as equivalent to direct affronts by Tehran. That followed Defense Secretary Pete Hegseth’s comments on Sunday that US strikes on Houthi sites will be “unrelenting” until the group stops targeting vessels in the Red Sea.
The geopolitical tensions “could easily shift some major market shorts back to the sidelines,” said Dennis Kissler, senior vice president for trading at BOK Financial Securities. US crude’s front-month contract is being met with resistance at a short-term moving average of $68.56, he said.
At least one fund placed an options bet equivalent to 20 million barrels that would profit if a flare-up in the Middle East pushes Brent’s June contract — currently trading near $71 — toward $100.
Still, crude has fallen more than $10 a barrel from this year’s high in January, driven by Trump’s escalating trade war, an OPEC+ decision to increase supply and a possible end to the war in Ukraine that would return Russian barrels to the market. The US president may speak to Russian leader Vladimir Putin this week as Washington pushes for a deal to end the three-year conflict.
However, futures remain in a bullish backwardation structure, with shorter-term contracts at a higher price than longer-dated ones, a sign of healthy supply and demand balances.
The darkening economic outlook from Trump’s salvos against the country’s major trading partners led Goldman Sachs Group Inc. to lower its Brent crude forecasts, analysts including Daan Struyven said in a note on Sunday. The firm also said oil demand growth would be lower than previous estimates as tariffs endanger global growth.
However, prices may recover “modestly” in the short term as the US economy remains resilient and sanctions on Russia show no immediate signs of easing, Goldman said.
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