Oil prices bounced back on Tuesday, recovering some of the previous day's losses, as growing tension in Eastern Europe and the Middle East fuelled concerns over possible supply disruptions.
Brent crude futures rose 61 cents, or 0.7%, to $86.88 a barrel at 0722 GMT after touching a session high of $87.27 a barrel earlier, reversing a 1.8% fall in the previous session.
U.S. West Texas Intermediate (WTI) crude futures climbed 44 cents, or 0.5%, to $83.75 a barrel, having slid 2.2% on Monday.
Oil prices reached seven-year highs last week, bolstered by tight worldwide supply and resurgent global demand.
"The market tone stays strong, supported by heightening geopolitical risk," said Chiyoki Chen, chief analyst at Sunward Trading.
"We see profit-taking when the prices move higher, but buying appetite for oil remains solid as investors are worried about supply disruptions in the event of a Russia-Ukraine conflict," he said.
NATO said on Monday it was putting forces on standby and reinforcing eastern Europe with more ships and fighter jets, in what Russia denounced as Western "hysteria" in response to its build-up of troops on the Ukraine border.
In the Middle East, Yemen's Houthi movement, aligned with Iran, launched a missile attack at the United Arab Emirates on Monday that targeted a base hosting the U.S. military, but was thwarted by U.S.-built Patriot interceptors, U.S. and Emirati officials said.
"Downside risk on the oil market will be limited as any escalations of the situation in Ukraine or the Middle East will cause the prices to skyrocket," said Satoru Yoshida, a commodity analyst with Rakuten Securities.
"Also, supply tightness is expected to continue as OPEC+ is struggling to reach its output target and will likely keep its policy of gradual increase of supply," he said.
OPEC+, which groups the Organization of the Petroleum Exporting Countries (OPEC) with Russia and other producers, is struggling to hit its monthly output increase target of 400,000 barrels per day (bpd).
Lower U.S. oil inventories are also providing support, with crude inventories around the NYMEX WTI delivery point at Cushing in Oklahoma at the lowest for the time of year since 2012.
Portfolio investors added to their bullish positions in oil for the fifth week running, as the worst of the latest wave of coronavirus infections passed and governments began to lift restrictions on business and travel.
(Reporting by Yuka Obayashi; Editing by Kenneth Maxwell and Kim Coghill)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Dear Reader,
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.
Digital Editor
RECOMMENDED FOR YOU