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Oil rose about $2 a barrel on Tuesday from a nine-month low a day earlier, supported by supply curbs in the U.S. Gulf of Mexico ahead of Hurricane Ian and as the U.S. dollar eased from its strongest level in two decades.
Prices drew support from analyst expectations of possible supply cuts from the Organization of the Petroleum Exporting Countries and allies (OPEC+), which is to meet to set policy on Oct. 5.
Brent crude settled at $86.27 a barrel, up $2.21, or 2.6% On Monday it fell as low as $83.65, the lowest since January. U.S. West Texas Intermediate (WTI) crude settled at $78.50, up $1.79, or 2%.
U.S. offshore oil producers said they were keeping an eye on Hurricane Ian's track as the powerful storm shut-in about 11% of oil production in the U.S. Gulf of Mexico as it barrelled toward Florida.
The outages may only provide a momentary reprieve for oil prices, said Bob Yawger of Mizuho in New York.
"The barrels will come back pretty soon, I would imagine," Yawger said, adding that there is a small chance the storm would change paths and force more shut-ins.
After shutting some its offshore crude production, BP Plc said the storm didn't pose a threat to its Gulf of Mexico assets and it was redeploying workers to oil platforms.
Crude prices had soared after Russia invaded Ukraine in February, with Brent in March coming close to its all-time high of $147. Recently, worries about recession, high interest rates and dollar strength have weighed.
"Oil is currently under the influence of financial forces," said Tamas Varga of oil broker PVM.
The U.S. dollar, which eased from a 20-year high, also helped support oil. A strong dollar makes crude more expensive for buyers using other currencies. [USD/]
The oil price drop in recent months has raised speculation that OPEC+ could intervene. Iraq's oil minister on Monday said the group was monitoring prices and did not want a sharp increase or a collapse.
"Only a production cut by OPEC+ can break the negative momentum in the short run," said Giovanni Staunovo and Wayne Gordon of Swiss bank UBS.
The market is awaiting the latest U.S. inventory reports, which analysts expect will show a 300,000-barrel increase in crude stocks. The American Petroleum Institute's report is out on Tuesday at 4:30 p.m EDT (2030 GMT).
(Additional reporting by Alex Lawler in London and Mohi Narayan in New Delhi; Editing by David Evans, Mark Potter, David Gregorio and Leslie Adler)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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First Published: Wed, September 28 2022. 06:30 IST