Oil rebounds from seven-month low as equities recover

August 06, 2024 (MLN): Oil rebounded from a seven-month low in tandem with global equities after yesterday's slump.

Brent crude advanced above $77 a barrel after plunging more than 5% over the previous three sessions.

While West Texas Intermediate crude (WTI) traded near $74 per barrel.

Japanese stocks and US equity futures gained following a global rout on Monday.

Meanwhile, output from Libya’s Sharara field stopped completely, with dueling administrations battling for control over the North African nation, as reported by Bloomberg.

Traders are still bracing for a retaliatory attack by Iran and regional militias on Israel for assassinations of Hezbollah and Hamas officials, although Tehran has reiterated it wants to avoid all-out war.

Brent came within cents of $75 a barrel on Monday before rebounding on news of the Libyan supply loss and concerns that the conflict in the Middle East could impact production from the region.

Prices have returned to near where they started the year following gains bolstered by OPEC+ supply cuts.

“The $75 floor under Brent oil prices will withstand macro fears,” Goldman Sachs Group Inc analysts including Daan Struyven said in a note. The limited risk of a US recession, resilient oil demand in developed nations and India, and an increase in speculative positioning should support prices, they said.

Investors will be looking to an industry report later Tuesday to gauge US crude inventories after five straight weeks of declines — the longest run since early 2022. Official data is due Wednesday.

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