Oil rebounds as geopolitics, demand concerns whipsaw investors
Aug 28 (Reuters) -Oil rebounded on Wednesday after a sharp drop in the previous session ended a three-day streak of gains as investors have whipsawed between concerns about potential supply losses from Libya and the Middle East and worries about global fuel demand.
Brent crude futures LCOc1 were up 25 cents, or 0.31%, at $79.80 a barrel at 0209 GMT. U.S. West Texas Intermediate crude CLc1 futures rose 17 cents, or 0.23%, to trade at $75.70.
Prices are bouncing back from Tuesday's more than 2% decline, which snapped a three-day streak of gains of more than 7%, as concerns about low refinery profit margins weighed on expectations for fuel demand amid data showing global consumption growth has been lower than forecast this year.
The market was also supported by industry data released late on Tuesday showing U.S. oil and fuel inventories fell last week.
However, the biggest risks remain the potential loss of supply in Libya, where about 1.2 million barrels per day of production may be shut in amid a political dispute between rival government factions, and an escalation of the Israel-Gaza conflict to involve militants in Lebanon and forces from Iran, a key Middle Eastern producer.
"Geopolitical risks continue to hover over the market," ANZ analysts said in a note.
Several oilfields across Libya have halted output as closures spread, engineers said on Tuesday, amid a dispute over control of the central bank and oil revenue.
There has still been no confirmation of any closures from the Tripoli-based government, or from the National Oil Corp (NOC), which is in charge of oil resources.
However, engineers at the southeastern Amal and Nafoora oilfields told Reuters production had been halted, while engineers at Abu Attifel, also in the east, said output was reduced.
Fighting continued in the Gaza Strip between Israel and Hamas militants, displacing Palestinians while there were few signs of a concrete breakthrough in ceasefire talks in Cairo.
The lack of progress in the talks is occurring at the same time Israel and Iranian-backed militant group Hezbollah traded fire along the Lebanese border over the weekend.
Crude oil inventories fell 3.407 million barrels in the week ended Aug. 23 last week, according to market sources citing American Petroleum Institute figures on Tuesday. Gasoline inventories fell by 1.863 million barrels, and distillates fell by 1.405 million barrels.
Later on Wednesday, weekly U.S. oil storage data is due from the U.S. Energy Information Administration (EIA) at 10:30 a.m. EDT.
Reporting by Georgina McCartney in Houston; Editing by Christian Schmollinger
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
