Oil prices rose for a second straight session on Tuesday, driven by optimism about recovering demand in China, and concerns over supply shortages following the shutdown of a major export terminal after an earthquake in Turkey.
Brent crude futures were up$1.74, or 2.15%, to $82.73 per barrel by 0804 GMT, while West Texas Intermediate U.S. crude futures CLc1 rose $1.70, or 2.29%, to $75.81 per barrel.
“Crude prices are rising on expectations that China’s recovery will take hold and on supply outages from the earthquake that devastated Turkey,” said Edward Moya, analyst at OANDA.
The International Energy Agency (IEA) expects half of this year’s global oil demand growth to come from China, the agency’s chief said on Sunday, adding that jet fuel demand was surging.
Saudi Arabia, the world’s top oil exporter, raised prices for its flagship crude for Asian buyers for the first time in six months amid expectations of demand recovery, especially from China.
Operations at Turkey’s 1 million barrel per day (bpd) oil export terminal in Ceyhan were halted after a major earthquake hit the region. The BTC terminal, which exports Azeri crude oil to international markets, will be closed on Feb. 6-8.
Daniel Hynes, senior commodity strategist at ANZ bank in Sydney, also pointed to the shutdown of the 535,000-bpd Phase 1 part of the Johan Sverdrup oilfield in Norway’s area of the North Sea as a major driver of prices.
The oil markets will watch U.S. Federal Reserve chair Jerome Powell’s speech on Wednesday, analysts said. Interest rate hikes typically strengthen the dollar, which could make crude more expensive for non-U.S. buyers.
“The rebound in oil prices is more like a cautious move ahead of Fed Powell’s speech tomorrow, when the Fed chairman may provide more clues on the future rate hike path,” said Tina Teng, an analyst at CMC Markets.