Oil prices rise for second day as supply fears and trade hopes lift market

SINGAPORE: Oil prices extended their recovery on Wednesday, climbing for a second consecutive day as concerns over supply disruptions and optimism about progress in US-China trade talks helped offset worries of weak demand.

Brent crude futures rose by 18 cents, or 0.29 percent, to trade at $61.50 a barrel by 1:37am GMT. Meanwhile, US West Texas Intermediate (WTI) crude gained 21 cents, or 0.37 percent, reaching $57.45.

Supply jitters keep market on edge

Prices have rebounded after hitting a five-month low on Monday, when fears of oversupply and sluggish demand triggered a sell-off. However, renewed geopolitical tensions and Western pressure on Asian buyers of Russian oil have revived supply concerns.

The situation worsened after reports that a planned meeting between US President Donald Trump and Russian President Vladimir Putin was put on hold, raising uncertainty over future energy cooperation.

“Despite the bearish tone in the market caused by oversupply and weak demand, the risk of disruption in key regions like Russia, Venezuela, Colombia and the Middle East continues to keep oil above the $60 mark,” said Mukesh Sahdev, founder and CEO of energy consultancy XAnalysts.

Trade optimism offers fresh support

Adding to the positive sentiment, investors are keeping an eye on upcoming talks between US and Chinese officials expected to take place this week in Malaysia. The two sides are reportedly working toward a deal to ease trade tensions that have weighed on global demand.

President Trump said earlier this week that he expects to reach a “fair trade deal” with Chinese President Xi Jinping during their planned meeting in South Korea next week. Hopes of progress in the long-standing trade dispute have given traders a reason to be cautiously optimistic.

US plans to top up oil reserves

Further support came from Washington’s plan to refill its Strategic Petroleum Reserve (SPR). The US Department of Energy announced on Tuesday that it intends to purchase one million barrels of crude oil for delivery to the SPR, taking advantage of the relatively low prices to rebuild the emergency stockpile.

Analysts at ANZ Research said the move to boost reserves could help stabilise market sentiment in the short term.

Meanwhile, data from the American Petroleum Institute showed that US crude, gasoline and distillate inventories fell last week, suggesting a tightening in domestic supply that also lent mild upward pressure to prices.

Overall, the oil market remains caught between conflicting forces, fears of a global supply glut on one side, and the persistent risk of geopolitical disruptions on the other, leaving traders to navigate a fragile balance that continues to sway prices day by day.