Oil prices have rebounded after posting losses for two consecutive sessions, but are on course to post their biggest weekly losses in 2019 as a result of surging crude stockpiles and economic growth worries.
Brent crude soared 85 cents per barrel to reach $68.61, while US West Texas Intermediate crude rose 75 cents to touch $58.66, Reuters reported. Brent is expected to post a fall of more than 5% this week.
According to government data, US crude inventories jumped by 4.7 million barrels last week to hit their highest levels since July 2017, indicating ample supplies in the country.
Prices have also been impacted by concerns over the ongoing trade war between the US and China snowballing into a more entrenched dispute. The Sino-US trade tensions have cast worries related to a potential slowdown in global economic growth and the resultant impact on oil demand.
TF Global Markets chief market analyst Naeem Aslam was quoted by Reuters as saying: “Clearly, bargain hunters are back in town. However, it is still set to record the worst week of the year and this is due to the increase in trade war tensions between the US and China.”
Some analysts opined that the gains made by Brent and WTI are expected to be short-lived. Futures brokerage London Capital Group Research head Jasper Lawler told Reuters: “Without a resolution to the ongoing trade dispute quickly, which now looks very unlikely, oil could struggle to push higher.”
Oil prices have continued to receive support from OPEC-led supply cuts and supply disruptions caused by US sanctions against Iran and Venezuela. The productions cuts by the producer cartel and other allies began in January in a bid to remove any oversupply in the market.