Oil prices remain close to their 3-week highs due to ongoing Middle East tensions and increasing demand from China.

On Tuesday, oil prices remained relatively stable in early Asian trading, staying near three-week highs due to increased Middle East tensions and improving China demand.

The March WTI contract rose 26 cents to $79.45 a barrel as traders prepared for that contract to expire during the day. The April WTI contract inched down 10 cents to $78.36 a barrel. The price of WTI for April delivery ticked down 8 cents to $83.48 a barrel by 0133 GMT.

Tony Sycamore, an IG market analyst, stated in a note that crude markets were "marginally lower" during "quiet trading over the Presidents' Day holiday in the U.S. and as demand concerns offset ongoing Middle Eastern geopolitical tensions."

The Houthis intensified their attacks on shipping lanes in the Red Sea and Bab al-Mandab Strait, resulting in at least four vessels being hit by drone and missile strikes since Friday. Among them was the Rubymar cargo vessel, which was in danger of sinking, according to the Houthis. This escalation of attacks raises the stakes in their campaign to disrupt global shipping in support of the Palestinians in Gaza.

ANZ analysts noted that stronger demand in China positively impacted sentiment.

During the national Lunar New Year holiday that ended on Saturday, tourism revenues in China surged 47.3% year-on-year and exceeded pre-COVID levels.

On Tuesday, China set a new benchmark reference rate for mortgages, which exceeded expectations, in an effort to bolster its struggling property market and economy.

Despite the presence of price-supportive factors, demand concerns persisted last week due to a bearish International Energy Agency report that forecasted a downward revision of the 2024 oil demand growth forecast, citing expectations that renewable energy would replace fossil fuel usage.