By Barani Krishnan
Investing.com - The outage of an oil export terminal after the earthquake in Turkey gave those long on crude the chance to push prices up sharply for a second day in a row on Tuesday, in a bid to close the gap on last week’s torrid selloff.
New York-traded West Texas Intermediate, or WTI, crude for March settled up $3.03, or 4.1%, at $77.14 per barrel.
The U.S. crude benchmark settled up 1% on Monday after plunging 7.5% last week, to a three-week low of $73.11, on recession fears and the uncertainty about the direction for U.S. interest rates after huge employment gains among Americans in January threatened to bump up inflation again.
London-traded Brent crude for March delivery rose $2.70, or 3.3%, to finish Tuesday’s regular session at $83.69, extending Monday’s 1.3% gain.Like WTI, Brent, the global crude benchmark, tumbled 7.5% last week, touching a three-week low of $79.62.
Operations at Turkey's 1 million barrel-per-day oil export terminal in Ceyhan were halted after a major earthquake hit the region, Reuters reported, adding that the facility, which exports Azeri crude oil to international markets, will be closed Feb. 6-8.
Also supporting crude prices were continued bets on ramped-up Chinese consumption as the world’s largest crude importer returns from a long Lunar New Year break, into an environment free of COVID-19 restrictions.
Adding to oil’s upside was a bold attempt by Saudi Arabia to raise for the first time in six months prices for its Asian-bound crude, also on bets over Chinese demand. The kingdom had previously ratcheted down the so-called OSP, or Official Selling Price, for its Arab Light crude to be competitive against Russia’s Urals crude, which had seen heavy discounting over the past year from Ukraine-war sanctions imposed by the West.
Another positive factor for oil was the remark by Federal Reserve Chairman Jerome Powell that the central bank was willing to be patient to let disinflation, which has just begun in the United States, do its work rather than embarking on stronger rate hikes.
Aside from these, oil market participants were on the lookout for weekly U.S. oil inventory data, due after market settlement from API, or the American Petroleum Institute.
The API will release at approximately 16:30 ET (21:30 GMT) a snapshot of closing balances on U.S. crude, gasoline and distillates for the week ended Feb. 1. The numbers serve as a precursor to official inventory data on the same due from the U.S. Energy Information Administration on Wednesday.
For last week, analysts tracked by Investing.com expect the EIA to report a a smaller crude stockpile build of 2.457 million barrels, versus the 4.14M barrel rise reported during the week to Jan. 27.
On the gasoline inventory front, the consensus is for a build of 1.271M barrels over the 2.576M barrel rise during the previous week. Automotive fuel gasoline is the No. 1 U.S. fuel product.
With distillate stockpiles, the expectation is for a drop/climb of 0.097M barrels versus the prior week’s gain of 2.32M barrels. Distillates, which are refined into heating oil, diesel for trucks, buses, trains and ships and fuel for jets, have been the strongest component of the U.S. petroleum complex in terms of demand.