Oil prices remained close to a two-week low on Tuesday due to weaker-than-expected economic data from China and warmer weather forecasts, which dampened the demand outlook.
Brent crude futures edged up by 12 cents (0.2%) to $77.20 per barrel by 0220 GMT, while U.S. West Texas Intermediate (WTI) crude futures rose by 10 cents (0.1%) to $73.27. Brent had settled at its lowest level since January 9 on Monday, with WTI hitting its lowest since January 2.
China, the world’s largest crude oil importer, reported a surprise contraction in January’s manufacturing activity, raising concerns over global crude demand growth.
“The overnight falls came on the back of weak Chinese PMI data yesterday and risk aversion flows following heavy falls in U.S. tech stocks,” said Tony Sycamore, an analyst at IG.
China’s demand for crude is further impacted by new U.S. sanctions on Russian oil. Analysts at FGE project that refineries in Shandong could lose up to 1 million barrels per day of crude supply due to a ban on U.S.-sanctioned tankers by the Shandong Port Group.
“Alternative crude barrels (to Russian supply) are being sought after at the same time, but they come at much higher costs,” FGE analysts explained.
Meanwhile, several Chinese independent refineries have halted operations or plan indefinite maintenance due to new tariff and tax policies, worsening financial losses.
India, the world’s third-largest crude importer, also faces potential disruptions to Russian oil supplies. However, Indian refiners are taking advantage of a sanctions wind-down period to secure purchases through March, according to FGE.
In the U.S., forecasts of warmer-than-normal temperatures this week have reduced the demand for heating fuels. After a recent surge in natural gas and diesel prices caused by extreme cold, the mild weather has allowed demand to ease.
“Temperatures in both regions (U.S. and Europe) are increasing, allowing for heating fuel demand to slide off some,” said Alex Hodes, an oil analyst at StoneX.
Additionally, broader financial markets faced pressure after a surge in interest for a low-cost artificial intelligence model launched by China’s DeepSeek. Australian companies tied to AI and data centers saw sharp stock declines on Tuesday, following a global rout sparked by DeepSeek while Australian markets were closed on Monday.
