Oil bounces back on Thursday as investors focus on tight supply, Brent jumps over $101/barrel
Oil prices rebounded after the sharp declines in the previous two sessions on Thursday as investors turned their focus to tight supply, amid fears over global recession risks and demand.
Brent crude futures rose 67 cents, or 0.7%, to $101.36 a barrel at 0402 GMT. WTI crude futures rose 59 cents, or 0.6%, to $99.12 a barrel and hit an intraday low of $96.57.
It has to be said that it is difficult to get oil prices down excessively, as Brent monthly spreads remain in a wide decline and point to tight supplies. In a backwardation market, early month prices are higher than in future months.
It's hard to say that the recent Iranian nuclear talks have accomplished much. Washington tightened sanctions on Iran on Wednesday and put pressure on Tehran as it talks about reviving the 2015 Iran nuclear deal. It seems that this issue, which has been occupying the industry for years, will not be resolved in 2022.
Oil prices slumped alongside other commodities such as metals and palm oil as central banks around the world hiked interest rates in the past few months to fight inflation, fueling recession fears and hitting demand for the commodity.
Brent and WTI closed on Wednesday at their lowest since April 11. The declines follow a dramatic fall on Tuesday despite tight global supplies. WTI slid 8% while Brent tumbled 9% - a $10.73 drop that was the third biggest for the contract since it started trading in 1988.
Traders are watching for possible oil supply disruption at the Caspian Pipeline Consortium (CPC), which a Russian court has said to suspend its activities for 30 days. Exports were still in progress as of Wednesday morning in CPC, which manages about 1% of the global oil supply.
Industry data on Wednesday showed US crude inventories increased by about 3.8 million barrels last week, according to market sources. Gasoline stocks fell by 1.8 million barrels, while distillate stocks fell by about 635,000 barrels.
In addition, investors are waiting for data from the US government, which will be announced today, and will shed light on the status of local oil and fuel stocks.
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