Oil price surge: Brent Crude bounces back in ‘reset’ amid return of supply concerns
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Oil prices rose by almost three percent as markets prepare to open on Wednesday. Brent Crude future rose by a total of $3.08 (£2.58) to $105.85 (£88.60) per barrel despite plunging by as much as 9.5 percent on Tuesday.
Yesterday’s drop is said to have been the biggest daily drop since March.
However, it was last up 92 cents (77 pence), or 0.9 percent, at $103.69 (£86.79) a barrel at 2.43am.
US West Texas Intermediate also returned to a higher rate of $102.14 (£85.50) a barrel, up $2.64 (£2.21), or 2.7 percent, after closing below $100 (£83.70) for the first time since late April.
Speaking about the bounce back, Again Capital LLC partner John Kilduff said: “Today is sort of a reset.
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“No doubt there is short covering and bargain hunters are coming in.”
He added: “The fundamental story regarding global tightness is still there… The sell-off was definitely overdone.”
CMC Markets’ Shanghai-based analyst Leon Li also said: “Although crude oil still faces the problem of a supply shortage, key factors that led to the sharp selloff in oil yesterday remain.”
He explained: “Thus, today’s rebound could be a short-term correction for bears and oil prices are likely to remain under pressure in the near future.”
The news comes just after a senior figure in OPEC claimed the industry was “under siege”.
OPEC secretary-general Mohammad Barkindo claimed on Tuesday the situation was due to years of under-investment.
He also suggested shortages could be eased if extra supplies from Iran and Venezuela were allowed.
Mr Barkindo said: “We could, however, unlock resources and strengthen capacity if the oil produced by the Islamic Republic of Iran and Venezuela were allowed to return to the market.”
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Russia’s former president Dmitry Medvedev, who served either side of Vladimir Putin’s two stints as the nation’s leader, also suggested a reported proposal from Japan to cap the price of Russian oil at around half its current level could exacerbate the situation.
He said the move could push prices to between $300 (£251.42) and $400 (£335.23) a barrel.
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