LONDON: Oil prices rose steeply on Thursday after sharp losses in the previous two sessions, as investors returned their focus to tight supply even as fears of a global recession persisted.
Brent crude futures were up $4.68, or 4.7%, at $105.37 a barrel by 1400 GMT. WTI crude futures climbed $5.11, or 5.2%, to $103.64 a barrel.
Trade was volatile, with prices earlier in the session showing losses of about $2.
“With Russian oil supplies set to drop as the year progresses and it runs out of Western parts to maintain fields, and with the rest of OPEC hopelessly uninvested in maintaining production capacity, I fear the days of $100 oil will be with us for some time yet,” said Jeffrey Halley, a senior market analyst at OANDA.
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Wall Street’s main indexes opened higher on Thursday, making up for some losses last week which had fueled recession fears, despite ongoing concerns about interest rate hikes aimed at reining in inflation.
On the supply side, traders are bracing for oil supply disruptions at the Caspian Pipeline Consortium (CPC), which has been told by a Russian court to suspend activity for 30 days.
Exports via the CPC, which handles about 1% of global oil supplies, were still flowing as of Wednesday morning.
In a sign that oil supply may remain tight, Washington tightened sanctions on OPEC member Iran on Wednesday, pressuring Tehran as it seeks to revive a 2015 Iran nuclear deal and unleash its exports from U.S. sanctions.
Oil prices have dropped in the past few weeks, highlighting fears of a sharp economic slowdown and a hit to commodities demand.
Brent and WTI closed on Wednesday at their lowest since April 11. The declines follow a dramatic fall on Tuesday when WTI slid 8% while Brent tumbled 9% - a $10.73 drop that was the third biggest for the contract since it started trading in 1988.
“Recession fears continue to grow and that obviously does raise some concerns for the demand outlook,” said Warren Patterson, ING’s head of commodity research.
“However, supportive fundamentals should mean that further downside is relatively limited.”