Global oil prices have risen, supported by tensions over the Russia-Ukraine crisis and expectations of a drop in US commercial inventories at the key Cushing terminal.
Brent North Sea crude for June closed at $US108.98 a barrel in London, a gain of 86 cents from Monday.
“Crude oil prices have snapped back to the upside after Monday’s weakness in what looks like an attempt to reassert that tighter sanctions against Russia were more dangerous than Monday’s price drop implied,” said Tim Evans of Citi Futures.
Crude oil prices on Monday had fallen in London but edged higher in New York, as fresh Western sanctions on Moscow were milder than expected.
The continuing unrest in Ukraine supported prices, but the market does not anticipate any major supply disruption, said analyst Andy Lipow.
The sanctions announced by the US and the European Union “should have very little impact on Russia oil supply”.
Lipow said that anticipation of another drawdown in crude stocks at the hub in Cushing, Oklahoma, the reference point for WTI, helped underpin prices.
Cushing inventories have fallen in 11 of the prior 12 weeks, and are at their lowest level since October 2009.
Traders awaited the US Department of Energy’s weekly petroleum report on Wednesday to see if the trend continues.
Meanwhile, the DoE was expected to report that crude-oil inventories, which are at their highest level since 1931, rose again.
Robert Yawger of Mizuho Securities USA said the conflicting numbers, bullish and bearish for prices, respectively, were vying for traders’ attention.
“The market will focus on one or the other on any given day. I tend to think the market will focus more on the Cushing number,” he said.
Citi’s Evans expressed concern that “the market is overbought and heavily reliant on both the tensions in Ukraine and the downtrend at Cushing for support”.
He said it is “vulnerable in the event that either of these supports give way”.
Traders also monitored developments in Libya, where the state National Oil Corporation is to resume exports from Zueitina port after declaring an end Tuesday to a force majeure imposed on the terminal blocked by rebels for nine months.
The port has an export has an export capacity of 100,000 barrels per day.