Futures on US West Texas Intermediate Crude Oil regained some ground on Thursday after a sharp decline in the prior two trading days, as market players again turned their attention to tight supply despite global recession risks.
Commodities and other risk-sensitive assets have been under pressure in recent weeks, as rising interest rates across the globe in an attempt to curb inflation raised concerns over a sharp economic slowdown and, as a result, a hit to commodity demand.
And with safe haven US Dollar being at two-decade highs, this has mounted additional pressure on dollar-priced commodities.
“Recession fears continue to grow and that obviously does raise some concerns for the demand outlook,” Warren Patterson, ING’s head of commodity research, was quoted as saying by Reuters.
“However, supportive fundamentals should mean that further downside is relatively limited.”
Patterson also noted that “recent Iranian nuclear talks don’t appear to have achieved much.”
Yesterday the United States tightened sanctions on Iran in an attempt to revive the 2015 Iran nuclear deal.
Consultancy Eurasia Group now sees a 35% chance of an agreement between the US and Iran in 2022, down from 40% previously, as it said the Islamic country was “likely ambivalent” about a deal.
Market players are also looking for potential oil supply disruptions at the Caspian Pipeline Consortium, which has been ordered by a Russian court to suspend operations for 30 days.
Still, Tengizchevroil, which operates Kazakhstan’s largest oilfield Tengiz, said that oil supply through the CPC pipeline had not been disrupted.
As of 8:24 GMT on Thursday WTI Crude Oil Futures were edging up 0.35% to trade at $98.45 per barrel. Yesterday the black liquid slid as low as $95.13 per barrel, which has been its weakest price level since April 12th ($94.88 per barrel).
At the same time, Brent Oil Futures were gaining 1.01% on the day to trade at $100.77 per barrel. Yesterday Brent Oil went down as low as $98.57 per barrel, which has been its weakest price level since April 11th ($97.65 per barrel).