Crude oil storage tanks are seen from above at the Cushing Oil Center in Cushing, Oklahoma on March 24, 2016. REUTERS/Nick Oxford/File Photo
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LONDON, July 6 (Reuters) – Oil prices rose on Wednesday, clawing back some of Tuesday’s sharp losses as supply concerns returned to the forefront and outweighed lingering worries about a global slowdown.
Brent crude was up $1.62, or 1.58%, at $104.39 a barrel by 0839 GMT.
US West Texas Intermediate (WTI) crude was up $1.04, or 1.05%, at $100.54 after closing below $100 in the previous session for the first time since late April.
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Both contracts posted their biggest daily declines since March on Tuesday as recession fears and other bearish pressures kept a lid on Wednesday’s price hike. read more
Oil prices have fallen since the dollar’s resurgence at 20-year highs against the euro and multi-month highs against other major peers.
A strong greenback usually makes oil more expensive in other currencies, which can curb demand.
Renewed concerns of COVID-19 lockdowns across China could limit oil price gains. read more
The Norwegian government on Tuesday ended a strike in the petroleum sector that had reduced oil and gas production, ending a deadlock that could worsen Europe’s energy crisis. read more
But despite Tuesday’s decline, analysts expect a quick rebound in oil prices as supply tightness lingers and front-month spreads persist.
Brent’s six-month market setup was steeply underperforming at $15.12 a barrel, just 70 cents higher than the previous day. A backlog is when contracts for oil supply are higher than in later months.
“Overnight price action, with both contracts trading in a nearly fifteen-dollar range, indicates panic and forced liquidation, rather than structural change in a tight supply-demand environment globally,” said Geoffrey Halley, senior market analyst at OANDA. Oil prices may be at risk of the worst possible fall.
Meanwhile, Kazakhstan said on Wednesday it was considering measures to deal with the impact of restrictions on oil exports via the Caspian Pipeline Consortium (CBC), which sends Kazakh crude oil via Russia to the Black Sea. read more
CPC, which handles about 1% of global oil, said on Wednesday that a Russian court had ordered a 30-day suspension of operations, citing issues related to oil spills. read more
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Additional reporting by Emily Chow in Kuala Lumpur, Aarti Somesekhar in Houston; Editing by Raju Gopalakrishnan
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