Singapore: Oil rebounded along with equities as pessimism over the global growth outlook eased a little, while rising tension in Venezuela revived fears of supply losses.
Futures rose as much as 1.9 per cent in New York after falling about 2 per cent over the previous two sessions. US Secretary of State Mike Pompeo warned that America won’t “stand idly by” as Russia sends troops to Venezuela, holder of the world’s biggest crude reserves. Russia has about 100 soldiers on the ground in the Organisation of Petroleum Exporting Countries (Opec) member, where output is slumping amid an economic crisis.
Crude futures have rallied about 30 per cent this year as Opec and its allies implement production cuts to stave off a global surplus. American sanctions on Iran and Venezuela have further squeezed supplies, but the demand outlook remains clouded by a slowing world economy and uncertainty over whether the US-China trade war will be resolved.
“It appears that concerns about demand have taken something of a back seat,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “Instead, market participants are focusing in the tight supply situation again.”
West Texas Intermediate (WTI) for May delivery rose $1 (Dh3.67) to $59.82 a barrel on the New York Mercantile Exchange at 8.29am local time. It closed 0.4 per cent lower on Monday after swinging between a 1.5 per cent loss and an 0.5 per cent gain.
Brent for May settlement advanced 1.1 per cent to $67.97 a barrel on the London-based ICE Futures Europe exchange, rising for a second day. The global benchmark crude was at a premium of $8.13 to WTI.
The insertion of Russian military personnel into Venezuela to support President Nicolas Maduro risks lengthening the suffering there, Pompeo told his Russian counterpart, Sergei Lavrov, according to a US State Department statement. The White House imposed sanctions on Venezuela’s state oil company earlier this year amid a standoff between Maduro and Juan Guaido, an opposition leader that the US recognises as Venezuela’s president.
A measure of oil volatility has spiked over the last two sessions as financial markets tumbled on fears the world economy will slow faster than expected.
The CBOE/Nymex Oil Volatility Index rose 2 per cent on Monday following a 4.9 per cent jump in the previous session.