Oil Prices Rise on US Attack on Houthis and China Economic Hopes

FILE PHOTO: An oil pumpjack is pictured in the Permian basin, Loco Hills regions, New Mexico, US, April 6, 2023. REUTERS/Liz Hampton/File Photo

Oil traded higher on Monday after the United States vowed to keep attacking Yemen's Houthis until the Iran-aligned group ends its assaults on shipping while Chinese economic data fueled hopes for higher demand.
US President Donald Trump launched military strikes against the Houthis on Saturday over the group's attacks against Red Sea shipping. One US official told Reuters the campaign might continue for weeks.
Brent futures rose 63 cents, or 0.9%, to $71.21 a barrel by 1017 GMT while US West Texas Intermediate crude futures gained 62 cents, or 0.9%, to $67.80, Reuters reported.
Chinese economic data also supported prices. Retail sales growth quickened over January-February in a welcome sign for policymakers seeking to boost domestic consumption, though unemployment rose and factory output eased.
"Oil prices are benefiting from better than expected Chinese economic data, more potential stimulus measures in China and renewed tensions in the Middle East, although so far there are still no supply disruptions," said UBS analyst Giovanni Staunovo.
The oil market has a "comparatively healthy physical backdrop," said Tamas Varga of broker PVM, citing the premium at which near-term oil contracts are trading over those for later delivery, a structure known as backwardation.
"Dips remain attractive, albeit short-term buying opportunities in an otherwise eerie macroeconomic environment," he said.
Oil rose slightly last week, though Brent is still down almost 5% this year on concern over a global economic slowdown driven by escalating trade tensions between the US and other nations.
OPEC+ oil producers' plan to raise oil output from April has also pressured prices. However, the prospect of tighter US sanctions against Iran more than offsets the gradual OPEC+ production increase, said Saxo Bank's Ole Hansen.
"China's plans to boost consumption and fresh Red Sea risks" are supporting the market on Monday, he added.
The prospect of peace in Ukraine has also weighed on prices. US President Donald Trump said he plans to speak to Russian President Vladimir Putin on Tuesday to discuss how to end the Ukraine war.