Posted By Jessica Weisman-Pitts
Posted on August 6, 2024
By Shariq Khan
NEW YORK (Reuters) -Oil prices rose about 1% in volatile trade on Tuesday, bouncing off multi-month lows hit in the previous session, as investor attention turned to supply tightness and financial markets recovered from their recent slump.
Brent crude futures were up 58 cents, or 0.8%, to $76.88 a barrel at 11.38 a.m. ET (1538 GMT). U.S. West Texas Intermediate futures were up 68 cents, or 0.9%, to $73.62 per barrel.
Iran’s vow of retaliation against Israel and the U.S. following the killing of two militant leaders has raised concerns that a wider war is brewing in the Middle East, which could have a direct impact on supplies from the region.
Lower production at Libya’s 300,000 barrel-per-day Sharara oilfield is also adding to concerns of supply shortages. Libya’s National Oil Corp said on Tuesday it would start to gradually decrease production at the field due to protests.
Recent declines in crude oil and fuel inventories at major trading hubs are also supporting oil prices.
“Oil fundamentals are still suggesting an undersupplied oil market, with oil inventories still falling,” UBS analyst Giovanni Staunovo said.
U.S. crude stockpiles posted a fifth consecutive decline in the week ended July 26, the longest falling streak since January 2021, according to government data. Fuel inventories at Europe’s Amsterdam-Rotterdam-Antwerp trading hub were at their lowest since February as of Aug. 3, according to Dutch consultancy Insights Global.
Brent futures had slumped to their lowest since early January in the previous session, while WTI touched its lowest since February, as a global stock market rout deepened on growing concerns of a recession in the United States.
The U.S. is the largest petroleum consumer, making its economy a critical component of oil demand.
U.S. central bank policymakers pushed back on Monday against the notion that weaker than expected July jobs data means the economy is in recessionary freefall.
Gasoline demand in the U.S. was likely at over 9 million barrels per day last week, also instilling confidence in the country’s economy, Staunovo said.
(Additional reporting by Ahmad Ghaddar, Robert Harvey, Arunima Kumar, Yuka Obayashi and Trixie Yap; Editing by Jonathan Oatis and Mark Potter)
