Oil prices eased only slightly on Tuesday, holding on to most of their gains from the prior session as mounting geopolitical risk after the fall of Syrian President Bashar al-Assad and China’s vow to ramp up policy stimulus kept a floor under prices.
Brent crude futures were down 13 cents, or about 0.2%, at $72.01 per barrel. U.S. West Texas Intermediate crude futures were down 14 cents, also 0.2% lower, at $68.23 at 0151 GMT. Both climbed more than 1% on Monday.
“Rising geopolitical tension in the Middle East following the collapse of the Syrian government has added a little risk premium to crude oil prices,” ANZ Research said in a note.
While Syria itself is not a major oil producer, it is strategically located and has strong ties with Russia and Iran, and a regime change could raise regional instability.
Ousted Syrian President Assad’s prime minister said he had agreed on Monday to hand power to the rebel-led Salvation Government, a day after the rebels seized the capital Damascus and Assad fled to Russia.
The imminent power transfer follows 13 years of civil war and the end to over 50 years of brutal rule by the Assad family. Oil prices also got a boost in the previous session from reports that China will adopt an “appropriately loose” monetary policy next year, the first easing of its stance in some 14 years, to spur economic growth in the world’s top oil importer. While a drop in China’s consumer inflation to a five-month low in November dragged on investor sentiment, analysts expect crude oil prices to benefit going forward from China’s fiscal stimulus.
“I think this morning’s weakness will prove to be a good buying opportunity, looking for crude oil to move towards the top of its recent range $72.50ish,” Tony Sycamore, analyst at IG, said by email.
The markets are expecting China trade data for November on Tuesday and a report from the American Petroleum Institute (API) industry group later in the day showing U.S. crude oil and gasoline stockpiles last week.
A preliminary Reuters poll showed on Monday that U.S. crude oil and gasoline stockpiles were expected to have fallen last week while distillate inventories likely rose. Data from the Energy Information Administration is due on Wednesday.
Also in the U.S., oilfield service companies ramped up hiring in November, adding 1,890 jobs in the sector, according to data from trade group Energy Workforce & Technology Council, in an indication of more drilling and higher oil production.