Oil prices rose as robust US data coincides with Venezuela and Russia supply risks

Oil prices settled higher on Tuesday, supported by stronger than expected US economic growth and renewed concerns over potential supply disruptions from Venezuela and Russia.

Brent crude futures settled up 31 cents, or 0.5%, at $62.38/barrel, while WTI rose 37 cents, or 0.64%, to $58.38/barrel. The gains followed a sharp rally in the previous session, when Brent posted its largest daily increase in two months and WTI recorded its strongest rise since 14 November.

Sentiment was buoyed by fresh US economic data showing faster than anticipated growth. The Commerce Department’s Bureau of Economic Analysis said in its initial estimate that US GDP expanded by 4.3% in the third quarter, underpinned by resilient consumer spending on healthcare and computing while the figure was also helped by increases in government defence spending and exports.

Market participants are now weighing whether the robust growth outlook will translate into stronger oil demand, or whether it could prompt the Federal Reserve to tighten monetary policy further in an effort to rein in inflation.

Supply side risks also lent support to prices. Earlier this month, US President Donald Trump announced a blockade on oil tankers under sanctions entering or leaving Venezuela, keeping vessel owners on alert. With storage capacity in Venezuela tightening, market participants warned that the country could be forced to shut in some production.

Concerns over Russian supply disruptions added to the upward pressure. Russian forces struck Ukraine’s Black Sea port of Odesa late on Monday, damaging port facilities and a vessel in the second attack on the region within 24 hours. Separately, Ukrainian drone strikes damaged two vessels and two piers in Russia’s Krasnodar region and sparked a fire in a nearby village.

Written by: Farid Muzaffar