Oil rebounds as financial markets steady after Turkey turmoil

[LONDON] Oil rebounded as financial markets stabilised after the initial panic over Turkey's economic meltdown eased.

Futures in New York added 1.4 per cent, recouping Monday's losses. Many developing-nation currencies, which tumbled following the collapse of Turkey's lira, recovered on Tuesday. In the US, crude stockpiles probably extended declines last week, according to a Bloomberg survey.

The lira's dive in recent weeks has prompted a rather muted reaction among commodities, though other threats to global growth - such as a trade war between the US and China - continue to damp confidence. Oil-supply risks remain, and crude futures have kept within a narrow range this month as traders weigh potential losses from Iran against increased OPEC production.

Breathing Easier

"Today the Turkish lira is strengthening, so the market is breathing a bit easier, lowering the shoulders a little bit," said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. Concern now shifts from demand to supply as Iranian sanctions loom, he said.

West Texas Intermediate crude for September delivery traded at US$68.11 a barrel on the New York Mercantile Exchange, up 91 US cents, at 8.52am local time. The contract fell US 43 cents on Monday. Total volume traded Tuesday was about 29 per cent below the 100-day average.

Brent for October settlement advanced 93 US cents to US$73.54 a barrel on the London-based ICE Futures Europe exchange, and traded at a US$6.10 premium to WTI for the same month. The global benchmark crude declined 20 US cents to US$72.61 on Monday.

In the US, crude inventories probably fell by 2.5 million barrels last week, according to the Bloomberg survey of analysts before government data due Wednesday. Stockpiles in the nation's storage hub in Cushing, Oklahoma, probably increased by 500,000 barrels.

BLOOMBERG