Oil rose from a two-week low as a tentative accord to prevent another US government shutdown reassured investors and boosted financial markets.
Crude futures rose 0.8 percent in New York, after sliding on Monday to the lowest settlement since January 28. Congressional negotiators said on Monday in Washington they had reached a deal in principle on border security to avoid closure of the federal government. US crude stockpiles are projected to rise for a fourth week, the longest such run since November, according to a Bloomberg survey before data due on Wednesday.
Crude’s rally has fizzled in February as concern the US and China won’t be able to defuse their trade war damps the demand outlook, while a strengthening dollar has reduced the appeal of commodities priced in the currency.
Prices have shown limited response to output reductions by the Organization of the Petroleum Exporting Countries (Opec) and its allies, as well as an escalating political crisis and sanctions against Venezuela.
“The broader market sentiment, risk on and risk off, continues to influence oil prices,” said Giovanni Staunovo, an analyst at UBS Group AG in Zurich. “With high Opec compliance and healthy oil demand, inventory dynamics might surprise and support prices over the coming months.”
West Texas Intermediate (WTI) crude for March delivery rose 44 cents to $52.85 a barrel on the New York Mercantile Exchange at 9:39 a.m. in London. The contract fell 31 cents on Monday to $52.41.
Brent for April settlement added 44 cents to $61.95 a barrel
on the London-based ICE Futures Europe exchange. It fell 1 percent to settle at
$61.51 on Monday. The global crude benchmark traded at an $8.76 premium
to WTI.
Senate Appropriations Chairman Richard Shelby said lawmakers agreed on all seven spending bills needed to keep government agencies open. The news spurred gains in European and Asian stocks on Tuesday, as investors were worried another partial shutdown would be a drag on US growth.