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Oil futures rose Tuesday, reclaiming a chunk of the ground as equities and other assets perceived as risky posted a partial bounceback from a sharp selloff suffered the previous day as worries over trade tensions rose.
Brent crude LCOM8, +0.67% , the global benchmark, rose 50 cents, or 0.7%, to $68.14 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures CLK8, +0.78% rose 47 cents, or 0.7%, to $63.48 a barrel.
Prices had slid to a two-week low Monday, with Brent closing down 2.5%, after China imposed import tariffs on U.S. goods. That was a response to tariffs on Chinese steel and aluminum imports introduced by the Trump administration earlier this year. Analysts and traders have warned that these actions could trigger a global trade war that would weigh on economic growth and subsequently dampen demand for petroleum products.
Read: Here’s how a ‘trade skirmish’ could become a global ‘trade war’
But as equities rebounded in choppy trade Tuesday, attention appeared to turn back toward supply concerns.
“Declining Venezuelan production levels, and signs that OPEC and Russia could extend their 1.8 million barrels-a-day cut agreement into next year could give support to fluctuating prices with increasing U.S. production trying to drag them down,” wrote analysts at Tradition Energy, in a Tuesday note.
Russian Energy Minister Alexander Novak on Tuesday said a joint organization for cooperation between members of the Organization of the Petroleum Exporting Countries, or OPEC, and non-OPEC countries once the current deal on output curbs expires at the end of 2018, Reuters reported.
Russia’s output in March exceeded its ceiling under the output curb.
Brent had closed up above $70 a barrel ahead of the Easter weekend—close to a three-year high—with prices lifted by growing geopolitical risk.
But prices started the second quarter under pressure. As well as concerns about trade, prices were hurt by burgeoning Russian oil production in March and a “confirmation that U.S. supply outperformed expectations in January,” according to analysts at consultancy JBC Energy.
Russia’s crude output in March climbed by 20,000 barrels a day, to 10.97 million barrels a day, according to government data. “It is the first increase since December and the highest production level for 11 months, which takes Russian output above the agreed ceiling” of its deal with OPEC, according to Tamas Varga, an analyst at brokerage PVM Oil Associates Ltd.
OPEC and 10 countries outside the oil cartel, including Russia, have been holding back crude output by roughly 1.8 million barrels a day since the start of last year. The deal, which is set to expire at the end of 2018, has helped drain a global supply glut that has weighed on prices since late 2014.
Among refined products, Nymex reformulated gasoline blendstock RBK8, +0.57% —the benchmark gasoline contract—fell 2.26 cents, or 1.1%, to $1.9887 a gallon, while May heating HOK8, +0.42% rose 1.18 cents, or 0.6%, to $1.992 a gallon.
May natural gas NGK18, +0.52% rose 1.7 cents, or 0.6%, to $2.70 per million British thermal units.