Oil prices stagnate amid mixed readings on business activity by Investing.com

Investing.com– Oil prices rose slightly in Asian trade on Tuesday, although a recent rally appeared to have dried up amid a series of mixed readings on business activity around the world.

Crude oil prices rose sharply in the past two weeks as optimism over lower interest rates helped prices recover from near three-year lows.

But that rebound has stalled in recent sessions as average readings on trade activity in several major economies raised concerns about slowing demand.

U.S. crude that expires in November rose 0.2 percent to $74.07 a barrel, while it rose 0.3 percent to $69.82 a barrel by 8:40 p.m. ET (00:40 GMT).

Mid-range PMIs halted oil’s rebound

Mixed PMI readings in the US, the euro zone and, more recently, Japan raised concerns about slowing manufacturing activity, which could herald sluggish demand for crude oil.

While services PMI growth showed some resilience in overall business activity, the prospect of an extended manufacturing slowdown presented more potential headwinds for crude oil.

Average PMIs added to concerns that oil demand will slow as global economic conditions worsen in the coming months, although oil bulls hope interest rate cuts from several major central banks will help offset that trend.

Middle East tensions, supply disruptions remain in play

Traders were still seen attaching some risk premium to crude as a war in the Middle East showed little signs of escalating.

Israel bombed several Hezbollah-linked targets in Lebanon on Monday, marking another potential escalation in its long-running conflict with the Lebanese military group. The country also continued its offensive against Hamas in Gaza.

Concerns about a wider conflict in the Middle East have oil traders bracing for the possibility of more supply disruptions. That notion has also factored into oil’s rebound over the past two weeks.

In the US, there was also a focus on Tropical Storm Helene – the second major storm to hit the Gulf of Mexico this month, after Hurricane Francine tore through the oil-rich region.

The extended supply disruption in the region presents a more subdued outlook for US oil markets, which could push prices higher in the near term.