Oil prices rebound from Tuesday tumble as supply concerns return

• Oil prices rise on Wednesday, recovering some of the losses from Tuesday.
• The price of oil rose 1.39 percent to $104.20 a barrel at 11:20 GMT.
• On Tuesday, both contracts experienced their biggest daily decline due to recession worries.

On Wednesday, oil prices increased, recovering some of the steep losses from Tuesday as supply concerns reemerged and trumped lingering concerns about a future global recession.

At 11:20 GMT, Brent crude futures increased by $1.43, or 1.39 percent, to $104.20 a barrel.

After closing below $100 in the previous session for the first time since late April, U.S. West Texas Intermediate (WTI) crude increased 65 cents, or 0.65 percent, to $100.15 a barrel.

On Tuesday, both contracts experienced their biggest daily decline since March as a result of recession worries and other bearish forces, which also restrained price growth on Wednesday.

Also Read

New Iranian oil tanker arrives in Syria: media

An Iranian oil tanker arrived in the Syrian port of Baniyas on...

The resurgent dollar, which is holding at a 20-year high against the euro and multi-month peaks against other major currencies, has taken a hit on oil prices.

Oil typically costs more in other currencies when the U.S. dollar is strong, which could reduce demand.

Gains in the price of oil could also be limited by resurgent worries over COVID-19 lockdowns in China.

All oil and gas fields that were impacted by a strike in Norway’s petroleum sector are anticipated to resume full operations within a few days, according to Equinor (EQNR.OL), adding to the downward pressure on pricing.

On Tuesday, the strike was put an end by the Norwegian government.

However, economists believe that oil prices will quickly rebound as long as supply remains constrained, citing front-month spreads that have maintained steady despite Tuesday’s price decline.

Little changed from the previous day, Brent’s six-month market structure was in strong backwardation at $14.82 per barrel. When oil contracts for immediate delivery are more expensive than those for later months, backwardation is present.

According to Jeffrey Halley, a senior market analyst at OANDA, “the price action overnight, with both contracts trading in near 15 dollar ranges, hints more at panic and forced liquidation, than a structural change in the tight supply-demand situation globally.” He added that oil prices may be in danger of overshooting to the downside.

A Russian court has ordered the Caspian Pipeline Consortium (CPC), which uses one of the largest pipelines in the world to transport oil from Kazakhstan to the Black Sea, to halt operations for 30 days, despite reports that exports are still occurring.

A Wednesday explosion at Kazakhstan’s massive Tengiz oilfield did not stop production; it injured three people while killing two others, according to the operator.

Also Read

Oil from U.S reserves is shipped abroad as gasoline costs remain high

The export of crude and fuel is blunting the impact of moves...