Oil Prices Increase on Tight Supply Outlook
Oil prices increased on Tuesday amid investor profit-taking and expectations of a tight supply-demand balance in the markets in the coming months, after falling to the lowest levels in nearly a month with the eased tensions in the Middle East.
In the global commodity market, oil futures shake off early losses and move higher with market attention on fundamentals.
“While the Middle East unrest and Russian/Ukraine issues will linger, with no real supply issues being noted the trade will focus more on seasonal demand and production numbers,” BOK Financial’s Dennis Kissler says in a note. Higher for longer U.S. interest rates remain a headwind, while the outlook for Memorial Day travel is bullish, he says.
International benchmark Brent crude traded at $87.15 per barrel, up by 0.15% from the closing price of $87 per barrel in the previous trading session. The American benchmark West Texas Intermediate (WTI) traded at $82.03 per barrel at the same time, a 0.16% rise from the previous session that closed at $81.9 per barrel.
Traders see a tightening supply-demand balance in the coming months as the approaching driving season is expected to spur increased demand. The prospect of potentially tighter supplies puts upward pressure on prices. Renewed US sanctions on Venezuela, which has an export capacity of around 600,000 barrels per day, also fueled supply concerns. Naira Steadies as Banks Issue Update on FX Purchase
However, global economic concerns, a large build in the world’s largest oil consumer, US crude oil stocks, and the Fed’s hawkish stance that has led to a strong dollar, continue to put downward pressure on oil prices. # Oil Prices Increase on Tight Supply Outlook
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