Home NewsCommodities News Oil rises 1% as tight supply outweighs economic worries By Reuters

Oil rises 1% as tight supply outweighs economic worries By Reuters

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Oil rises 1% as tight supply outweighs economic worries By Reuters


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© Reuters. Panoramic view of the Phillips 66 oil tank and Bayway refinery in Linden, New Jersey, U.S., March 30, 2020. REUTERS/Mike Segar

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Scott DiSavino

NEW YORK (Reuters) – Oil prices edged up about 1 percent to a two-week high in choppy trade on Tuesday, as markets focused more on tight supplies and a weaker dollar than fears that a slowing economy would hit oil demand.

Futures were up $1.08, or 1.0%, at $107.35 a barrel by 1:22 p.m. ET (1722 GMT). U.S. West Texas Intermediate (WTI) crude gained $1.53, or 1.55%, to $104.13.

Brent was on track for its highest close since July 4, while WTI was on track for its highest close since July 8.

Oil prices were underpinned by supply worries amid Western sanctions on Russia, but pressured by efforts by global central banks to rein in inflation, raising concerns that a potential recession could cut energy demand.

The dollar fell to a two-week low against a basket of other currencies, boosting oil demand by lowering costs for buyers using other currencies.

Farhat Bengdara, Libya’s new head of the National Oil Company (NOC), has rejected a challenge to his appointment and resumed work at some closed fields and ports, a move that could create problems for supply .

Last week, U.S. President Joe Biden visited Saudi Arabia, the de facto leader of the Organization of the Petroleum Exporting Countries (OPEC), whose crude exports slipped to a four-month low of 7.050 million barrels per day (bpd) in May.

Biden wants a deal to boost oil production to keep fuel prices in check, but has received no clear assurance from Saudi officials. The Saudi foreign minister said he did not think there was a shortage of crude oil in the market, just a lack of refining capacity.

In the U.S., expectations of a build in crude inventories weighed on prices. Analysts polled by Reuters had forecast crude inventories rose by 1.4 million barrels last week. [EIA/S] [API/S]

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

The U.S. 3:2:1 and gasoline crack spreads – a measure of refining margins – both fell to their lowest levels since April.

“Crack spreads have continued to fall, falling over the past four weeks to their lowest level since late April…indicating weaker product demand,” said analysts at consultancy Ritterbusch and Associates.

In early trade, oil prices fell on weak economic data from around the world.

U.S. new home construction fell to a nine-month low in June. In China, stocks closed lower, with foreign investors selling the most shares in more than a month. The International Monetary Fund has warned that any move by Russia to stop supplies to Europe will trigger economic contractions in several countries.

However, gas flow through the Nord Stream 1 pipeline from Russia to Germany surged before the end of annual maintenance as operators carried out stress tests.

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