SINGAPORE: Oil prices pared earlier losses to inch up during trade on Tuesday, despite concerns over a potential US recession, the impact of tariffs on global growth and as OPEC+ sets its sight on ramping up supply.
Brent futures edged up 18 cents, or 0.3 percent, to $69.46 a barrel at 9:40 a.m. Saudi time after falling in early trade. US West Texas Intermediate crude futures rose 9 cents, or 0.1 percent, to $66.12 a barrel after previous declines as well.
Despite the market noise, Brent at around $70 a barrel is quite a strong support and oil prices may look to stage a technical bounce at current levels, said Suvro Sarkar, energy sector team lead at DBS Bank, adding that the OPEC+ supply response will continue to remain flexible depending on market conditions.
“If oil prices fall below the $70 per barrel mark for an extended period, output hikes may be paused in our opinion. OPEC+ will also keep a careful eye on Trump’s Iran and Venezuela policies,” he said.
“The US has already taken back Chevron’s license to operate in Venezuela and it remains to be seen whether Iran sanctions will be intensified. However, in the interim, worries about global growth amid policy uncertainties and trade wars will dominate.”
US President Donald Trump’s protectionist policies have roiled markets across the world, with Trump imposing and then delaying tariffs on his country’s biggest oil suppliers, Canada and Mexico, while also raising duties on Chinese goods. China and Canada have responded with tariffs of their own.
Over the weekend, Trump said a “period of transition” for the economy is likely but declined to predict whether the US could face a recession amid stock market concerns about his tariff actions.
“Trump’s comments triggered a wave of selling as investors started pricing in the risk of weaker growth in demand,” Daniel Hynes, senior commodity strategist at ANZ said.
Stocks, which crude prices often follow, slumped on Monday, with all three major US indexes suffering sharp declines. The S&P 500 had its biggest one-day drop since Dec. 18 and the Nasdaq slid 4 percent, its biggest single-day percentage drop since September 2022.
US Commerce Secretary Howard Lutnick said on Sunday Trump would not let up pressure on tariffs on Mexico, Canada and China.
On the supply front, Russia’s Deputy Prime Minister Alexander Novak said on Friday the OPEC+ group agreed to start increasing oil production from April, but could reverse the decision afterwards if there were market imbalances.
In the US, crude oil stockpiles were expected to have risen last week, while distillate and gasoline inventories likely fell, a preliminary Reuters poll showed on Monday.
The poll was conducted ahead of weekly reports from industry group the American Petroleum Institute, due at 11:30 p.m. Saudi time on Tuesday, and the Energy Information Administration, the statistical arm of the US Department of Energy, at 5:30 p.m. Saudi time on Wednesday.
