On Tuesday (31st), oil prices rose slightly in the Asian afternoon market, after a sharp drop of nearly 3% the day before, as concerns about supply disruptions in the Middle East eased and the market awaited the outcome of the Federal Reserve's interest rate meeting.

Israel's ground attack on Gaza did not escalate into a large-scale Middle East war

Due to the lack of further escalation of the conflict between Israel and Hamas, traders have lowered their expectations for a conflict risk premium, resulting in a significant drop in crude oil prices. Previously, this conflict had sparked concerns that other Middle Eastern countries might intervene and cause a disruption to the region's oil supply, but such concerns have not yet become a reality.

However, traders remain vigilant about the development of the war, especially as Israel launches a large-scale ground offensive against the Gaza Strip.

In addition, some traders chose to lock in recent profits and stop trading ahead of multiple important economic events this week, especially before the Federal Reserve's interest rate decision on Wednesday.

As of 13:48 Beijing time (01:48 a.m. Eastern Time), the bulk commodity market of Investing.com shows that the price of WTI crude oil futures in the United States increased by 50 cents, or 0.61%, to $82.81 per barrel; Brent crude oil futures rose 45 cents, or 0.51%, to $86.78 per barrel.

On Monday, US oil and oil companies fell by about 2% to 3%, reversing all the gains since the outbreak of the Hamas conflict in Israel on October 8th.

China's PMI data is weaker than expected, leading to an unexpected contraction in the manufacturing industry

On the other hand, as the world's largest oil importer, China's Purchasing Managers' Index (PMI) data was weaker than expected, and manufacturing activity unexpectedly contracted in October, while the expansion rate of non manufacturing activity also slowed significantly. The demand for Chinese goods at home and abroad remains weak, and it is difficult for business activities to rebound.

The data further raises doubts about how much China's oil consumption will increase this year.

Meanwhile, Chinese oil and gas giant Sinopec (OTC: SHIEY) (HK: 0386) recently stated that China's fuel demand may peak this year and gradually decrease as demand for electric vehicles increases.

The opening of the Federal Reserve meeting has raised concerns about the outlook for interest rates

Prior to the end of the Federal Reserve's interest rate meeting on Wednesday, several oil traders stopped trading and shipped out. Although it is widely expected that the Federal Reserve will keep interest rates unchanged, it is also expected to reiterate that interest rates will remain high for a longer period of time.

High interest rates may drag down economic growth in the coming months, and as the global monetary environment tightens, it is expected to also suppress oil demand.

The strengthening of the US dollar in recent trading days has also brought pressure to oil prices.

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