Oil rebounded along with global markets as pessimism over the global growth outlook eased a little, while rising tension in Venezuela revived fears of supply losses.
Futures rose as much as 1.6 percent in New York after falling about 2 percent over the previous two sessions. U.S. Secretary of State Mike Pompeo warned that America won’t “stand idly by” as Russia sends troops to Venezuela, holder of the world’s biggest crude reserves. Russia has about 100 soldiers on the ground in the OPEC nation, where output is slumping amid an economic crisis.
Crude futures have rallied about 30 percent in New York and London this year as the Organization of Petroleum Exporting Countries and its allies implement production cuts to stave off a global surplus. American sanctions on Iran and Venezuela have further squeezed supplies, but the demand outlook remains clouded by a slowing world economy and uncertainty over whether the U.S.-China trade war will be resolved.
“It appears that concerns about demand have taken something of a back seat,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. “Instead, market participants are focusing in the tight supply situation again.”
West Texas Intermediate for May delivery rose 92 cents to $59.74 a barrel on the New York Mercantile Exchange as of 7:53 a.m. local time. It closed 0.4 percent lower on Monday after swinging between a 1.5 percent loss and an 0.5 percent gain.
Brent for May settlement advanced 0.9 percent to $67.84 a barrel on the London-based ICE Futures Europe exchange, rising for a second day. The global benchmark crude was at a premium of $8.08 to WTI.
The insertion of Russian military personnel into Venezuela to support President Nicolas Maduro risks lengthening suffering there, Pompeo told his Russian counterpart, Sergei Lavrov, according to a U.S. State Department statement. The White House imposed sanctions on Venezuela’s state oil company earlier this year amid a standoff between Maduro and Juan Guaido, an opposition leader that the U.S. recognizes as Venezuela’s president.
A measure of oil volatility has spiked over the last two sessions as financial markets tumbled on fears the world economy will slow faster than expected. The Cboe/Nymex Oil Volatility Index rose 2 percent on Monday following a 4.9 percent jump in the previous session.
Other oil-market news: The dramatic ramp-up in U.S. shale production is running into a combination of issues — technical and financial — that threaten to slow the pace of expansion, according to some of the industry’s biggest companies. Members of the OPEC+ coalition have formally agreed to cancel their meeting scheduled for April, following the recommendation of the group’s Joint Ministerial Monitoring Committee last week, the delegates said. The OPEC+ committee that oversees the deal will meet in Jeddah on May 19, according to delegates.