Oil rises 2% as tightening supplies take focus
[NEW YORK] Oil rose nearly 2 per cent on Tuesday as attention centered on geopolitical factors tightening supplies that are leading to falling exports from Venezuela and declining US inventories.
Despite concerns about weaker demand due to an economic slowdown, oil prices have risen more than 25 per cent this year, supported by supply curbs by the Organization of the Petroleum Exporting Countries plus allies, and losses due to US sanctions on Iran and Venezuela.
Venezuela's main oil export port of Jose and its four crude upgraders have been unable to resume operations following a massive power blackout on Monday, the second in a month, according to industry workers and a union leader close to the facilities.
"There is no electricity, everything is paralysed," oil workers' union leader Jose Bodas told Reuters on Tuesday.
The blackout earlier this month, due to years of underinvestment and lack of maintenance, also interrupted oil exports at Jose, the lifeblood of the Opec nation's economy, eroding total export volumes and causing delays in loading and discharging oil.
"We're seeing increasing attention paid to what is going on in Venezuela and to the effect of sanctions," said Gene McGillian, director of market research at Tradition Energy. "Buyers are driving prices higher due to expectations that tightening of waivers on US sanctions on Iran will create a tighter fundamental picture."
Brent settled up 76 cents at US$67.97 a barrel, not far below its year-to-date high of US$68.69, reached on March 21.
US crude futures' gains were sharper, rising US$1.12, or 1.9 per cent, to US$59.94 a barrel, ahead of government inventory data.
Crude futures were little changed in post-settlement trade after the American Petroleum Institute, a trade organization, said US crude inventories rose 1.9 million barrels in the latest week. The market was waiting to see whether official figures due on Wednesday confirmed the API data or were in line with estimates that forecast a 1.2 million-barrel decline.
Worries about demand have limited oil's rally as manufacturing data from Asia, Europe and the United States pointed to an economic slowdown, although bullish bets by some investors are rising.
"So far, demand concerns have not proven too much of a headwind," analysts at JBC Energy wrote.
Investor concern over the global economy had intensified on Friday after disappointing German and US factory data led to an inversion of the US Treasury yield curve, which some see as a leading indicator of recession.
"Recession risks have risen to the highest since 2008," said Ole Hansen, head of commodity strategy at Saxo Bank.
REUTERS
KEYWORDS IN THIS ARTICLE
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Energy & Commodities
Pricey coffee is here to stay as hoarding, heat hit Vietnam supply
Oil settles higher as weak US economic growth offset by supply concerns
India's Vedanta misses Q4 profit estimates on lower prices
BHP targets Anglo American in bid valuing miner at US$39 billion
China's Sinopec charts global expansion with refinery in rival India's backyard
Gold trades in tight range as market focuses on US economic data