Oil prices hover near two-week low, weak China data adds to demand concerns

Oil prices edged higher but remained near a two-week low on Tuesday, as weak economic data from China and rising temperatures elsewhere dampened the demand outlook.

Brent crude oil futures were up by 35 cents, or 0.45 per cent, to $77.43 per barrel by 0930 GMT. US West Texas Intermediate crude futures were up 30 cents, or 0.41 per cent, to $73.47. Brent settled on Monday at its lowest since Jan. 9, while WTI hit its lowest since Jan. 2. 

 

Supporting prices 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.

"If such disorder spreads, which is not unusual when Libya's oil industry is held to ransom by one group or another, the current National Oil Corporation evaluated production of 1.4 mbpd will come under threat," said analyst John Evans at oil broker PVM.

On the other hand, China, the world's largest crude oil importer, reported on Monday an unexpected contraction in January manufacturing activity, adding to concerns over global crude demand growth.

"The general tone of caution in the risk environment, coupled with weaker Chinese PMI numbers that cast further doubt on China's oil demand outlook, may serve as a drag on oil prices," IG analyst Yeap Jun Rong said.

China's crude oil demand is also expected to be hit by the latest US sanctions on Russian oil trade. FGE analysts see refineries in Shandong losing up to 1 million barrels per day of crude supply in the near term amid a ban imposed by the Shandong Port Group on US-sanctioned tankers.

Several independent refineries in China have halted operations, or plan to do so, for indefinite maintenance periods, sources told Reuters, as new Chinese tariff and tax policies plunge plants deeper into losses.

In the US, weather forecasts are for warmer-than-normal temperatures through this week, which is also weighing on demand for heating fuels after extreme cold sparked a natural gas and diesel rally in prior sessions.

Broader financial markets were under pressure from a surge of interest in a low-cost artificial intelligence model launched by Chinese firm DeepSeek.

"Losses (in the oil market) appear relatively limited from the turmoil in US tech stocks," IG's Yeap said.

However, oil markets remain jittery, and there is some time to play out before there is clarity on the ramifications of US policy involving tariffs and sanctions, said Ashley Kelty, an analyst at Panmure Liberum.