Oil prices rose modestly in a see-saw session on Tuesday, as concerns about the global consumption outlook counterbalanced the struggle by big OPEC producers pump enough supply to meet growing demand.
Both benchmarks were at one point up by $1 per barrel, but Brent crude pared gains and was up just 32 cents to $74.24 a barrel by 11:49 a.m. EDT (1549 GMT) after falling by almost 2 per cent on Monday.
The October West Texas Intermediate (WTI) contract, which expires on Tuesday, rose 16 cents to $70.45 a barrel, after dropping 2.3 per cent in the previous session. The more-active November contract rose 27 cents a barrel to $70.41.
Brent and the more-active WTI contract earlier reached session highs of $75.18 a barrel and $71.48 per barrel, respectively.
“It seems to be a very nervous trade today,” said Phil Flynn, senior analyst at Price Futures group in Chicago. “It’s a little bit of ongoing concerns about the potential impact of demand going forward.”
Prices pared gains on Tuesday after the TASS news agency said Russia believes global oil demand may not recover to its 2019 peak before the pandemic, as the energy balance shifts.
However, OPEC and its allies struggled to pump enough oil in August to meet current consumption as the world recovers from the coronavirus pandemic. Several countries appeared to have produced less than expected as part of the OPEC+ agreement – suggesting a supply gap could grow.
Investors across financial assets have been rocked by fallout from the China Evergrande crisis that has harmed asset values in risk markets like equities.
In addition, the U.S. Federal Reserve is expected to start tightening monetary policy, which could cut investor tolerance for riskier assets such as oil. Federal Reserve policy-makers begin a two-day meeting Tuesday.
U.S. oil production is still recovering from hurricanes that hit the Gulf Coast region. Royal Dutch Shell, the largest U.S. Gulf of Mexico oil producer, said on Monday that damage to offshore transfer facilities from Hurricane Ida will cut production into early next year.
About 18 per cent of the U.S. Gulf’s oil and 27 per cent of its natural gas production remained offline on Monday, more than three weeks after Hurricane Ida.
Industry data later on Tuesday was expected to show U.S. crude and product inventories falling.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.