© Reuters. FILE PHOTO: Oil pump jacks are seen at the Vaca Muerta shale oil and gas deposit in Argentina’s Neuquen Patagonia province on January 21, 2019. REUTERS/Agustin Marcarian
(Reuters) – Oil prices surged on Thursday, rebounding from sharp losses in the previous two sessions, as investors turned their attention to tight supply despite lingering fears of a potential global recession.
Futures were up $5.39, or 5.4%, at $106.08 a barrel as of 12:23 p.m. ET (1623 GMT). U.S. WTI crude futures rose $5.61, or 5.7%, to $104.14 a barrel.
trade volatility. At the session low, prices were down about $2.
Wall Street’s main indexes opened higher, recouping some of the losses last week on recession fears sparked by the central bank’s aggressive interest rate hikes to fight inflation.
“Over time, Russia’s oil supply will decline, the western region will run out of oil to maintain oil fields, and the rest of OPEC hopelessly has no investment in maintaining capacity, and I fear the day of $100 oil will be It’s been with us for a while,” said Jeffrey Halley, senior market analyst at OANDA.
On the supply side, traders are bracing for oil supply disruptions to the Caspian Pipeline Consortium (CPC), which a Russian court has told to suspend activities for 30 days.
Exports through CPC, which handles about 1% of global oil supply, were still flowing as of Wednesday morning.
Washington further squeezed global supply, tightening sanctions on OPEC member Iran on Wednesday, putting pressure on Tehran as it seeks to revive the 2015 Iran nuclear deal and free up its exports.
Oil prices have fallen over the past few weeks as investors fear a sharp economic slowdown could hit demand for commodities.
Oil inventories rose by 8.2 million barrels last week, the U.S. Energy Information Administration said.
However, supplies of the product, the best proxy for US consumer demand, rose to 20.5 million bpd in the latest week.
“Almost every indicator in the report seems to suggest that only demand is gaining momentum,” said Phil Flynn, an analyst at Price Futures Group.
On Wednesday, Brent and WTI closed at their lowest levels since April 11. On Tuesday, WTI fell 8%, while Brent fell 9% to $10.73, the third-biggest drop for the contract since trading began in 1988.
“Recession fears continue to build, which obviously does raise some concerns about the demand outlook,” said Warren Patterson, head of commodities research at ING.
“However, supportive fundamentals should mean that further downside is relatively limited.”