Oil rose after its biggest quarterly slump of the year, yet ongoing concerns that a faltering global economy will erode demand continued to weigh on the market.
Futures increased 1.1% in New York, having tumbled 7.5% in the past three months as Saudi Arabia fully restored its output following devastating attacks that had temporarily halved its production. Attention is now returning to U.S.-China trade negotiations, with investors looking for clues on the prospect for oil demand as high-level talks are expected on Oct. 10-11.
Saudi Arabia’s recovery from the attacks and the concerns over growth in oil consumption have driven crude prices back to where they were before the Sept. 14 attacks. This means that while oil gained on Tuesday, the increase could be temporary, said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA.
“The bounce back in oil prices this morning looks more technical than fundamentally or macro-driven, and it is building on what was a very weak close” on Monday, Tchilinguirian said. “I am not sure that the very short-term momentum is there to sustain it.”
West Texas Intermediate for November delivery rose $0.57 to $54.64 a barrel on the New York Mercantile Exchange as of 11:14 a.m. in London. The front-month contract fell $1.84 on Monday to cap a 7.5% decline last quarter.
Brent for December settlement gained $0.57, or 0.9%, to $59.79 a barrel on the ICE Futures Europe Exchange. The November contract, which expired Monday, ended the session 1.8% lower. The global benchmark crude on Tuesday traded at a $5.29 premium to WTI for the same month.
