By Barani Krishnan
Investing.com - The rally in crude oil returned Tuesday after a two-day respite as worries of a potential Russia-Ukraine war helped longs maintain a positive narrative on the market, despite forthcoming U.S. weekly data that could show another uncomfortable build in gasoline stocks.
Wall Street’s renewed tumble on U.S. rate hike fears also did not hit the oil market as it did on Monday.
The West Texas Intermediate benchmark for U.S. crude was up $1.91, or 2.2%, at $85.22 per barrel by 2:13 PM ET (19:13 GMT). WTI fell 2.2% on Monday and
London-traded Brent, the global benchmark for oil, rose $1.48, or 1.7%, to $86.91 per barrel. Brent lost 1.8% in the previous session.
“The market remains fundamentally bullish and conflict with Russia does nothing to alleviate supply-side pressures,” said Craig Erlam, analyst at online trading platform OANDA. “If anything, the risks are tilted in the other direction.”
Western nations continued to press for a diplomatic outcome on Tuesday to the escalating Russia-Ukraine crisis, even as American troops were placed on “high alert” for possible deployment to Eastern Europe while NATO dispatched additional ships and fighter jets to the region. Moscow has repeatedly denied any intent to invade, blaming Washington for increasing tensions in the region.
Oil traders have, meanwhile, seized the opportunity to chase prices higher on the war narrative. Crude producers in the OPEC+ alliance also pumped less over the past month, reinforcing the theory of an undersupplied market.
In the United States, the world’s No.1 oil consumer, the supply-demand picture for oil has been somewhat different.
Tuesday’s market rebound came ahead of weekly data from the U.S. Energy Information Administration that could be mixed at best.
Ahead of the EIA report, due at 10:30 AM ET (15:30 GMT) on Wednesday, the American Petroleum Institute will issue a snapshot at around 4:30 PM today of what last week’s stockpiles of crude and fuel products could have been.
According to industry analysts tracked by Investing.com, crude inventories likely fell by 728,000 barrels last week versus the build of 515,000 barrels reported by the EIA for the previous week to Jan. 14.
Distillates inventories are expected to have fallen by 1.26 million barrels, adding to the previous week’s decline of 1.43 million.
But {{ecl-485||gasoline stocks} likely jumped by 2.54 million barrels, on top of the previous week’s rise of 5.87 million. Gasoline barrels have ballooned by a record of nearly 24 million barrels over a three-week period amid seasonally-weak U.S. demand that contrasts with the rally in global oil prices.