Investing.com-- Oil prices rose Tuesday, recovering some ground after the US announced plans to buy crude for its strategic reserves, although concerns over weaker future demand remain.
At 09:30 ET (13:30 GMT), Brent oil futures rose 0.2% to $71.15 a barrel, while West Texas Intermediate crude futures rose 0.3% to $67.58 a barrel.
Both contracts slid more than 6% on Monday after an Israeli strike against Iran over the weekend avoided Tehran’s oil and nuclear infrastructure, quelling fears about a severe escalation in the Middle East conflict.
This saw traders rapidly adjust the risk premium attached to oil prices.
SPR refilling offers support
The crude benchmarks received a boost late Monday after the US government said it was seeking up to 3 million barrels of oil for the Strategic Petroleum Reserve for delivery through May next year, bringing a new substantial buyer into the market.
The American Petroleum Institute industry group is scheduled to release a weekly report on US crude inventories later Tuesday, with the Energy Information Administration will release the official report on Wednesday.
Economic data to provide guidance
That said, concerns about future demand remain given the global economic weakness, and in China in particular.
Purchasing managers activity data from top oil importer China are due on Thursday, followed by gross domestic product data from the U.S. for the third quarter.
PCE price index data - the Federal Reserve’s preferred inflation gauge - is due on Friday, as is nonfarm payrolls data for October.
Middle East tensions remain in focus
Fears of supply disruptions in the Middle East, due to a worsening conflict, had also been a major driver of oil prices over the past month, especially after Iran attacked Israel at the beginning of October.
Israel’s weekend strike was in retaliation for the early-October attack.
Tehran was seen downplaying the impact of the strike, but still threatened retaliation against Israel over the attack, keeping some elements of Middle East risks still in play.
Israel also showed little intent in scaling back its offensive against Hamas and Hezbollah, keeping hopes of a potential Middle East ceasefire limited.
Oil markets brace for US elections
Sentiment towards oil was also on edge before the U.S. presidential elections, which are less than a week away. The dollar surged in the run-up to the elections, pressuring oil markets as traders braced for a tight race between Donald Trump and Kamala Harris.
Recent polls and prediction markets showed Trump gaining some ground over Harris, with a Trump victory likely to herald inflationary policies in the coming months.
A change in U.S. administration also heralds a shift in the country’s policies towards the Middle East.
(Ambar Warrick contributed to this article.)