Image Source: PixabayOil prices dipped very marginally today (with WTI holding above $70), down for the fourth day in a row as traders focused on an uncertain demand outlook – particularly from China, the world’s largest crude importer.Additionally, traders have “largely priced in the Middle East tensions,” and the base-case scenario for many of them is that there will be a limited attack on Iranian energy facilities, if any, from Israel, Naeem Aslam, chief investment officer at Zaye Capital Markets, told MarketWatch.

However, “the fact is that we are looking at a situation where two countries are attacking each other directly,” he added.

“[It] is a very serious situation because currently the U.S. is very much mediating the matter and tensions are incredibly high on both sides.”

“On the demand side, market participants are looking for clearer signals regarding China’s fiscal policy, as uncertainties about its economic recovery affect oil-demand expectations,” said Christopher Tahir, senior market strategist at Exness, in emailed comments.

“Both the Organization of the Petroleum Exporting Countries and the International Energy Agency have lowered their forecasts for global oil-demand growth in 2024, mainly due to expected changes in China’s consumption,” he noted.

For now, the recent hurricanes are playing havoc with any analysis of the real-time supply/demand regime based on API/DOE data.API

After the large gasoline draw the prior week (and big crude build), the effect of Hurricanes Helene and Milton continues to ripple through physical energy markets. API reports major product draws and a surprise crude draw (build expected) last week…Source: BloombergWTI was hovering just above $70 ahead of the API print and rallied into the green for the day after the print…From a price perspective, Zaye Capital Markets’ Aslam believes oil is very much back to “normal fundamentals,” with the Chinese demand equation influencing the market.

“So in the absence of any serious geopolitical tension, the path of least resistance is skewed to the downside,” he said.

Tomorrow (a day late due to the Columbus Day holiday), we will get the official weekly data on US production, demand, and inventories.More By This Author:Stagflation Odds Jump In Latest NY Fed Survey As Inflation Expectations RiseGoldman Q3 Profit Jumps 45% On Surge In Equity-Trading Revenue As Earnings Beat Across The BoardFutures Flat At All Time High As Oil Tumbles, Bank Earnings Shine