Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

Oil settles up 1% at 2-week high on worries about tight supply

Published 07/18/2022, 08:46 PM
Updated 07/19/2022, 04:02 PM
© Reuters. General view of oil tanks and the Bayway Refinery of Phillips 66 in Linden, New Jersey, U.S., March 30, 2020. REUTERS/Mike Segar
LCO
-
NG
-

By Scott DiSavino

NEW YORK (Reuters) -Oil prices rose about 1%, with global benchmark Brent settling at a two-week high in volatile trade on Tuesday as traders worried about tight supplies and a weaker dollar.

Brent futures rose $1.08, or 1.0%, to settle at $107.35 a barrel. U.S. West Texas Intermediate (WTI) crude rose $1.62, or 1.6%, to settle at $104.22.

Brent posted its highest close since July 4 and WTI its highest since July 8. At one point during the volatile session, both benchmarks were down around $2 a barrel.

"Crude oil has staged an incredible turnaround today," said Robert Yawger, executive director of energy futures at Mizuho.

"There was no big red bullish headline to greenlight the rally, but the combination of beaten down open interest and low trade volume will often encourage wild price swings," Yawger said.

The U.S. dollar slid to a two-week low against a basket of other currencies, making oil less expensive for buyers using other currencies.

Oil prices have whipsawed, supported by supply fears due to Western sanctions on Russia, but pressured by global central bank efforts to tame inflation which stoked fears that a potential recession could cut energy demand.

On Friday, open interest in New York Mercantile Exchange futures fell to the lowest since September 2015 as investors cut risky assets like commodities, worried that the Federal Reserve will keep raising U.S. interest rates.

The U.S.-Canada Keystone pipeline was operating at reduced capacity on Monday after a pump station was shut.

Libya's new National Oil Corp (NOC) chief Farhat Bengdara rejected challenges to his appointment and work resumed at some shuttered fields and ports.

The U.S. 3:2:1 and gasoline crack spreads - measures of refining profit margins - both fell to their lowest since April.

"Crack spreads continuing plunge of past four weeks to narrowest level since late April ... suggesting weakening product demand," said analysts at Ritterbusch and Associates, a consultancy.

Last week, U.S. President Joe Biden visited top oil exporter Saudi Arabia, de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), whose crude exports slipped in May to a four-month low.

Biden hoped to strike a deal on an oil production boost to tame fuel prices, but the kingdom's foreign minister said the market's problem was not a crude shortage but a lack of refining capacity.

In the United States, expectations for an increase in crude inventories weighed on prices. Analysts polled by Reuters forecast crude inventories rose by 1.4 million barrels last week. [EIA/S] [API/S]

The American Petroleum Institute (API), an industry group, will issue its inventory report at 4:30 p.m. EDT (2030 GMT) on Tuesday. The U.S. Energy Information Administration (EIA) reports at 10:30 a.m. EDT (1430 GMT) on Wednesday.

© Reuters. An aerial view shows tugboats helping a crude oil tanker to berth at an oil terminal, off Waidiao Island in Zhoushan, Zhejiang province, China July 18, 2022. cnsphoto via REUTERS

On Tuesday, people familiar with Biden's plans told Reuters that the president plans to announce new federal measures aimed at the climate crisis on Wednesday.

Early in the session, oil prices fell on weak economic data from around the world.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.