Oil prices bounced back on Tuesday (25 January), recovering some of the previous day’s losses, as growing tension in Eastern Europe and the Middle East fuelled concerns over possible supply disruptions.
Oil prices reached seven-year highs last week, bolstered by tight worldwide supply and resurgent global demand.
NATO said on Monday it was putting forces on standby and reinforcing eastern Europe with more ships and fighter jets, in what Russia denounced as Western “hysteria” in response to its build-up of troops on the Ukraine border.
“Downside risk on the oil market will be limited as any escalations of the situation in Ukraine or the Middle East will cause the prices to skyrocket,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.
Lower U.S. oil inventories are also providing support, with crude inventories around the NYMEX WTI delivery point at Cushing in Oklahoma at the lowest for the time of year since 2012.
Portfolio investors added to their bullish positions in oil for the fifth week running, as the worst of the latest wave of coronavirus infections passed and governments began to lift restrictions on business and travel.
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