Investing.com-- Oil prices settled higher Tuesday, underpinned by additional monetary stimulus from China boosting hopes for global oil demand and the risk of escalating conflict in the Middle East disrupting supplies.
At 2.30 p.m. ET (18:30 GMT), West Texas Intermediate crude futures rose 1.7% to settle at $71.56 a barrel, while Brent oil futures rose 1.8% to $74.50 a barrel.
Chinese stimulus supports
Crude prices rose sharply after Chinese officials unveiled earlier Tuesday a slew of planned measures to spur economic growth.
The People’s Bank of China (PBOC) said it is now set to cut reserve requirements for banks by 50 basis points to unlock more liquidity, while the government also said it would reduce mortgage rates for existing loans in an attempt to boost the ailing property market.
The moves come after the PBOC slashed a short-term repo rate on Monday in a bid to further boost liquidity.
China is the biggest importer of crude in the world, but an economic slowdown has raised concerns that demand will be hit going forward.
Middle East tensions, supply disruptions remain in play
The crude market has also gained as a war in the Middle East showed little signs of deescalation.
Israel bombed several Hezbollah-linked targets in Lebanon on Monday, marking a further potential escalation in its long-running conflict with the Lebanese military group. The country also kept up its offensive against Hamas in Gaza.
Concerns over a bigger conflict in the Middle East saw oil traders pricing in the possibility of more supply disruptions.
In the U.S., focus was also 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.
Extended supply disruptions in the region present a tighter outlook for U.S. oil markets, which could boost prices in the near-term.
Middling PMIs weigh on demand
This news, coupled with optimism over lower interest rates, has helped prices rebound from near three-year lows.
However, middling readings on business activity from several major economies continue to raise concerns over slowing demand.
Mixed purchasing managers index readings from the US, the eurozone, and more recently, Japan, raised concerns over slowing manufacturing activity, which could herald sluggish demand for crude.
While growth in services PMIs showed some resilience in overall business activity, the prospect of an extended manufacturing slowdown presented more potential headwinds for crude.
The middling PMIs added to concerns that oil demand will slow as global economic conditions worsen in the coming months, although oil bulls are hoping that interest rate cuts from several major central banks will help offset this trend.
(Ambar Warrick contributed to this article.)