Oil prices were steady on Thursday after steep losses in the previous two sessions, as investors returned their focus to tight supply even as fears of a global recession persisted.
Brent crude futures rose 14 cents, or 0.1%, to US$100.83 a barrel by 0900 GMT. WTI crude futures climbed 21 cents, or 0.2%, to US$98.74 a barrel.
Prices swung between about US$2 in losses and gains of nearly US$1 in volatile trade.
“Recession fears continue to grow and that obviously does raise some concerns for the demand outlook,” said Warren Patterson, ING’s head of commodity research.
“However, supportive fundamentals should mean that further downside is relatively limited.”
He added that it’s hard to be overly bearish on oil prices as the Brent monthly spreads remain in wide backwardation, referring to prompt-month prices trading higher than those for future months.
“Recent Iranian nuclear talks don’t appear to have achieved much”, Patterson added, after Washington tightened sanctions on Iran on Wednesday, pressuring Tehran as it seeks to revive the 2015 Iran nuclear deal.
In recent weeks oil prices have slid, fanning fears of a sharp economic slowdown and a hit to demand for commodities.
Brent and WTI closed on Wednesday at their lowest since April 11. The declines follow a dramatic fall on Tuesday when WTI slid 8% while Brent tumbled 9% – a US$10.73 drop that was the third biggest for the contract since it started trading in 1988.
“If the forecasted recession is not severe, the crude price should remain in the US$100/bbl range for the next 2-three years,” said Fereidun Fesharaki of consultancy FGE.
Traders are watching for possible oil supply disruptions at the Caspian Pipeline Consortium (CPC), which has been told by a Russian court to suspend activity for 30 days. Exports at CPC, which handles about 1% of global oil supplies, were still flowing as of Wednesday morning.