Oil prices pared earlier losses to rise up during trade on Tuesday, helped by weakness in U.S. dollar, although gains were capped as concerns mounted over a potential U.S. recession and the impact of tariffs on global economic growth.
Investors are also closely monitoring OPEC+ plans as the producer group is set to bring its initial barrels to the market starting in April, awaiting further clarity on their strategy.
Brent futures rose 47 cents, or 0.68%, to $69.75 a barrel at 0936 GMT after falling in early trade. U.S. West Texas Intermediate crude futures climbed 42 cents, or 0.64%, to $66.45 a barrel after previous declines as well.
The dollar index hit a four-month low, making oil less expensive for overseas buyers.
Both benchmarks closed 1.5% lower in the previous session.
Scaling back or abolishing punitive measures will ease the fears of economic contraction or inflation and halt the stock market slump, especially if coupled with a mutually acceptable Ukrainian-Russian peace deal, PVM analyst Tamas Varga said.
“Consequently oil prices would stabilize although due to the current plunge, it is hard to see OPEC+ going ahead with its plan and releasing oil back to the market from April,” said Varga.
Oil prices sink
On Friday, Russia’s Deputy Prime Minister Alexander Novak told reporters that the OPEC+ producer group will go ahead with its April increase but may then consider other steps, including reducing production.
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.
U.S. President Donald Trump’s protectionist policies have shaken global markets, imposing and delaying tariffs on major oil suppliers Canada and Mexico, while also raising duties on China, prompting retaliatory measures.
Over the weekend, Trump said a “period of transition” is likely but declined to predict a U.S. recession amid stock market concerns over tariffs.
Stocks, which crude prices often follow, slumped on Monday, with all three major U.S. indexes suffering sharp declines. The S&P 500 had its biggest one-day drop since December 18 and the Nasdaq slid 4.0%, its biggest single-day percentage drop since September 2022.
Investors now await key U.S. inflation data due on Wednesday to analyse the Central Bank’s interest rate stance.
In the U.S., 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 reports from the American Petroleum Institute at 4:30 p.m. EDT Tuesday and the Energy Information Administration at 10:30 a.m. EDT Wednesday.
American Dollar Exchange Rate