Oil rebounds from biggest tumble this year on outlook for demand

Oil rebounded after the biggest one-day tumble this year, with traders focused on the still-positive demand outlook as the pandemic eases.

West Texas Intermediate climbed above $84 a barrel after shedding more than two per cent on Monday, when U.S. equities swooned then recovered. The volatile trading comes as the Federal Reserve prepares the ground for interest-rate increases, and Russian troops amass on the border with Ukraine. In recent months, oil bears have retreated as speculators turn more bullish amid lower stockpiles.

Crude rallied to a seven-year high last week as global consumption remained strong in the face of the omicron variant. While stockpiles usually grow early in the year, traders are fretting that by the Northern Hemisphere’s summer, when demand typically rises, inventories may be too low to prevent a jump in prices.

“Right now, the buffers are running really, really thin,” Amrita Sen, head of research at consultant Energy Aspects, said in a Bloomberg Television interview. “Demand is coming in far stronger than expected.”


  • WTI for March delivery advanced 1.2 per cent to $84.31 a barrel at 10:16 a.m. London time.
  • Brent for March settlement gained 1.3 per cent to $87.40 a barrel.

A Russian invasion of Ukraine would potentially have widespread implications for energy and commodities markets, including oil and gas. The risk of that happening in the next few weeks stands at more than 50 per cent, according to RBC Capital Markets analyst Helima Croft. Disruption to oil flows from Russia could easily send prices to $120 a barrel, JPMorgan Chase & Co. wrote last week. 

Costlier oil is helping to fan inflationary pressures worldwide, prompting central banks to tighten monetary policy and leading governments to take steps to cushion the impact on consumers. On Tuesday, Japan said it will give subsidies to refiners in a bid to curb gasoline prices.

© 2022 Bloomberg L.P.

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.