Oil prices climbed for the third consecutive day on Tuesday, while gold hit a record high after Israel ended the ceasefire in Gaza with deadly strikes on the enclave, escalating tensions in the Middle East.
Brent, the benchmark for two thirds of the world's oil, was up by 0.61 per cent at $71.50 a barrel at 11.16am UAE time. West Texas Intermediate, the gauge that tracks US crude, rose by 0.61 per cent to $67.99 a barrel.
Israel launched new strikes on Gaza early on Tuesday after ceasefire talks with Hamas stalled. The attacks killed more than 250 people across the enclave, its Health Ministry said.
Israeli Prime Minister Benjamin Netanyahu’s office said it instructed the military to launch strikes on Hamas after the group refused to release hostages and rejected offers from US envoy Steve Witkoff and ceasefire mediators.
The renewed Israeli aggression follows large-scale strikes by the US against the Iran-backed Houthi rebels in Yemen on Saturday. The attack, launched over the group's attacks on Red Sea shipping, was the largest military operation in the Middle East since US President Donald Trump returned to office in January.
A push by China’s senior policymakers for expansionary fiscal measures to counter deflation and boost consumption in the country have helped oil prices to rebound after recent softness, said Kelvin Wong, senior market analyst at Oanda Group.
On Sunday, China’s State Council announced a "special action" plan to boost consumer spending, including measures to raise household income and introduce a childcare subsidy initiative. It is the latest move to revive the Chinese economy that, aside from weak consumer spending, is also facing a significant downturn in its once-booming real estate sector.
China, the world’s largest crude importer, experienced slower oil demand growth last year, leading to less crude oil being processed by its refineries and a lower volume of shipments of crude imports compared with the record set in 2023. The country received 11.1 million barrels per day in 2024, down from 11.3 million bpd in 2023, the US Energy Information Administration said.
Last week, the International Energy Agency forecast global oil demand would rise by 1.03 million bpd this year, 70,000 bpd lower than its previous projection, with growth driven primarily by Asia, and particularly China.
New record for gold
Geopolitical tensions and economic uncertainty have driven gold to a record above $3,000 an ounce, as investors flocked to the haven asset. Spot gold was trading 0.47 per cent higher at $3,015.32 an ounce.
The precious metal has been supported by growing uncertainty about the pace of global economic growth, particularly in light of Mr Trump’s tariff policy.
Gold has risen by nearly 15 per cent since the start of the year, as investors expect inflationary pressures from tariff wars to slow the US in economic output and worries of recession in the world's largest economy roiled markets last week.
US equities rebounded for a second straight session on Monday, after sharp losses pushed S&P 500 to the edge of correction territory on Thursday. US stocks indexes have rallied as retail sales data from last month eased concerns of an immediate slowdown in the country.
The S&P 500 closed 0.64 per cent higher on Monday, while the Dow Jones ended up 0.85 per cent. The tech-heavy Nasdaq 100 lagged behind the two benchmarks, finishing the session with a 0.55 per cent gain.
“The loss of momentum among the tech giants and high valuations continue to weigh on appetite as uncertainties loom and growth expectations wane,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
However, Wall Street is set to open lower on Tuesday. S&P 500 E-minis, which track the S&P 500 stock market index, were down 0.24 per cent, while Nasdaq futures dropped 0.36 per cent. Meanwhile, Asian stocks closed higher on Tuesday, fuelled by optimism surrounding US economic data and China's stimulus measures.
Japan's Topix settled 1.29 per cent higher at 2,783.56, Australia's S&P/ASX 200 closed marginally higher and Hong Kong's Hang Seng was up 22 per cent. India’s BSE Sensex Index gained 1.08 per cent.
