NEW YORK: Oil prices rose on Tuesday, rebounding from an early fall of more than $1 a barrel on lift from a weaker dollar and supply concerns highlighted by Saudi Arabia’s energy minister.
Benchmark Brent crude futures rose by 44 cents to $93.70 a barrel by 11:03 a.m. EDT, while U.S. West Texas Intermediate crude futures rose by 77 cents to $85.35.
The U.S. dollar index fell during afternoon trade, making dollar-denominated oil less expensive for other currency holders and helping to push prices higher.
Further support came from comments by Saudi energy minister Prince Abdulaziz bin Salman that energy stocks were being used as a mechanism to manipulate markets.
“It is my duty to make clear that losing emergency stocks may be painful in the months to come,” he told the Future Initiative Investment (FII) conference in Riyadh.
China’s Sept crude oil imports down 2% on year
Meanwhile, tightening markets for liquefied natural gas (LNG) worldwide and major oil producers cutting supply have put the world in the middle of “the first truly global energy crisis,” the head of the International Energy Agency (IEA) said on Tuesday.
Both the comments from Riyadh and the IEA are “a reminder that when it comes to the energy crisis, it’s far from over,” said Phil Flynn, an analyst at Price Futures group. “There are still concerns the market is undersupplied.”
Oil fell by more than $1 a barrel earlier in the day on signs of uncertain economic activity in the United States and China, the world’s two biggest oil consumers.
On Monday, government data showed China’s crude oil imports in September were 2% lower than a year earlier while business activity contracted in the euro zone, the United Kingdom and the United States in October.
Goldman Sachs CEO David Solomon said on Tuesday that he believes a U.S. recession is “most likely”, while a recession could be occurring in Europe.
The U.S. Federal Reserve could raise interest rates beyond 4.5-4.75% if it does not see real changes in behavior, he said at the FII conference.
U.S. crude oil inventories are expected to rise this week, which could limit price gains. Analysts polled by Reuters estimated on average that crude inventories rose by 200,000 barrels in the week to Oct. 21.