By David Hodari
Oil prices rebounded Thursday as investors reevaluated news that had sent Brent to its biggest decline in almost two-and-a-half years on Wednesday.
The price of crude fell amid concern over resurgent Libyan supply and the U.S.-China trade dispute. But some analysts question how soon that oil will hit markets, while investors around the world appeared to take a more relaxed view of the threat of a trade war on Thursday.
Brent crude, the global oil benchmark, was up 1.5% at $74.52 a barrel on London's ICE Futures exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading 0.7% higher at $70.87 a barrel.
Brent moved higher Thursday following a near 7% tumble Wednesday after Libya's state-run National Oil Corp. lifted the force majeure on eastern oil ports that had kept the country's crude off global markets amid continued civil war.
Analysts estimated that those ports could contribute approximately 700,000 barrels of oil a day to the global market.
"When you get a market move and poor liquidity, it snowballs and you get declines of greater magnitude," said Harry Tchilinguirian, global head of commodity markets strategy at BNP Paribas.
But some analysts now ask how long it will take for that oil to get to markets. Commerzbank said in a note that it is unclear how much damage has been sustained in the reclaimed oil ports following fighting last month.
The cocktail of bearish factors on Wednesday prompted investors to ignore what strategists at ING referred to as bullish market reports from both the U.S. Energy Information Administration on Wednesday and the American Petroleum Institute on Tuesday.
The EIA's report revealed that U.S. crude inventories fell by 12.63 million barrels over the past week--a significant increase on the API's own report of 6.8 million barrels the previous day.
The global oil market supply backdrop also remains constructive, analysts said, with Brent prices having flirted with three-year highs earlier in the week amid a spate of global supply issues.
While the Libyan supply squeeze had been among the largest price drivers, supply problems in Canada, strikes in Norway, and expectations of dropping exports from Venezuela and sanction-hit Iran have also boosted prices in recent weeks.
That said, the Organization of the Petroleum Exporting Countries released its first 2019 production forecasts Wednesday, in which it estimated an increase in non-OPEC supply of 2.1 million barrels a day. On the strength of that report, "the oil market would be sufficiently supplied next year," Commerzbank said in its research note.
The International Energy Agency released its oil market report Thursday, warning that recent outages could stretch the world's spare capacity cushion and hinted that it would be ready to access emergency supplies if needed.
Nymex reformulated gasoline blendstock--the benchmark gasoline contract --fell 4.6% to $2.06 a gallon. ICE gasoil changed hands at $650.50 a metric ton, down 2.1% from the previous settlement.
contributed to this article.
Write to David Hodari at [email protected]