Oil price rallies as Turkey turmoil eases off

Turkey news.
People wave Turkish national flags during a march on the anniversary of last year's failed coup in Istanbul, Turkey, on Sunday, July 15, 2017. Photographer: Kostas Tsironis/Bloomberg

Oil rebounded as financial markets stabilised after the initial panic over Turkey’s economic meltdown eased.

Futures in New York added 1.4 percent, recouping Monday’s losses. Many developing-nation currencies, which tumbled following the collapse of Turkey’s lira, recovered on Tuesday.

In the U.S., crude stockpiles probably extended declines last week, according to a Bloomberg survey.

The lira’s dive in recent weeks has prompted a rather muted reaction among commodities, though other threats to global growth – such as a trade war between the U.S. and China – continue to damp confidence.

Oil-supply risks remain, and crude futures have kept within a narrow range this month as traders weigh potential losses from Iran against increased OPEC production.

Breathing Easier

“Today the Turkish lira is strengthening, so the market is breathing a bit easier, lowering the shoulders a little bit,” said Bjarne Schieldrop, chief commodities analyst at SEB AB in Oslo. Concern now shifts from demand to supply as Iranian sanctions loom, he said.

West Texas Intermediate crude for September delivery traded at $68.11 a barrel on the New York Mercantile Exchange, up 91 cents, at 8:52 a.m. local time.

The contract fell 43 cents on Monday. Total volume traded Tuesday was about 29 percent below the 100-day average.

Brent for October settlement advanced 93 cents to $73.54 a barrel on the London-based ICE Futures Europe exchange, and traded at a $6.10 premium to WTI for the same month. The global benchmark crude declined 20 cents to $72.61 on Monday.

In the U.S., crude inventories probably fell by 2.5 million barrels last week, according to the Bloomberg survey of analysts before government data due Wednesday.

Stockpiles in the nation’s storage hub in Cushing, Oklahoma, probably increased by 500,000 barrels.