Oil Edges Up From Yearly Lows on Shrinking Russia Crude Flows
Oil rose on signs of a tighter market and rising geopolitical tensions, but held near the lowest levels of the year as planned US tariffs continued to weigh on sentiment.
West Texas Intermediate climbed by 1.9% to settle near $72 a barrel Monday, following the longest weekly losing streak since September. Russian oil production last month fell short of its OPEC+ quota, easing concerns of oversupply, while soaring natural gas prices in Europe incentivized the burning of oil for power. Physical traders also honed in on flaring tensions in the Middle East after Israel and Hamas accused each other of violating the terms of a six-week ceasefire deal.
Crude prices have tumbled 10% since their January high, as Trump’s threats to levy imports from Canada, Mexico and China triggered the longest losing streak since September. Hedge funds have dumped bullish WTI bets for the last two weeks, while raising short positions to the highest in two months.
That “sharp reduction in positioning has created room for a rally as many traders scaled back their exposure,” said Rebecca Babin, senior energy trader at CIBC Private Wealth Group.
The US president flagged more tariffs Sunday, this time on aluminum and steel, which would apply to all countries. The duties could ripple through the US energy industry, including among oil drillers that rely on specialty steel that’s not made in the country. Trump didn’t specify when the levies would start.
Chinese tariffs on US goods were set to start Monday in retaliation against Trump’s levies that took effect last week. Trade war risks may cause OPEC+ to once again extend current production quotas, Morgan Stanley analysts led by Martijn Rats said in note.
WTI for March delivery climbed 1.9% to settle at $72.32 a barrel in New York. Brent for April settlement rose 1.6% to settle at $75.87 a barrel.
Source : Bloomberg
