Crude oil futures rebounded Thursday after a two-day rout that sent the U.S. benchmark to three-month lows below $100/bbl.
Rising fears of recession were blamed for the recent sharp drop in crude oil prices, but analysts note the oil market remains tight.
“It seems as though the market is starting to price in [a recession] scenario,” ING commodity research chief Warren Patterson said, but added it is difficult to be overly bearish on oil prices as the Brent monthly spreads remain in wide backwardation, indicating tight supplies.
Traders also are watching for possible oil supply disruption at the Caspian Pipeline Consortium, which has been told by a Russian court to suspend activity for 30 days; the CPC handles ~1% of global oil supplies.
Even an unexpected weekly rise in U.S. crude inventories failed to dampen the oil price rebound, as EIA data showed inventory draws to both gasoline and distillates.
J.P. Morgan analysts warned recently that crude prices could skyrocket to as high as $380/bbl if Russia retaliates to price caps by imposing deep cuts in oil production.