Brent crude only briefly went below its rebound area of around $83 per barrel. This was a reaction to concerns over some supply shortages which may automatically follow the shutdown of an important export terminal on the Mediterranean Sea coast.
The Ministry of Energy in Ankara was forced to take such a restrictive technical decision, suspending the pumping of hydrocarbon products for safety reasons after a damaging earthquake hit Turkey and Syria.
At the same time, deliveries are continuing through the Kirkuk-Ceyhan pipelines from the Iraq and Baku-Tbilisi-Ceyhan route from Azerbaijan through the territory of Georgia.
This probably will have a temporary impact on oil prices, as operations of nearly one million barrels per day (bpd) of shipments are going to be suspended until February 8.
A halt of the 535,000 barrels per day part of the Johan Sverdrup oilfield in Norway's area of the North Sea could also contribute to moderate price growth, as well as hopes for reopening of the Chinese economy.
The International Energy Agency (IEA) said during the weekend it expects that as much as a half of potential global oil demand augmentation may come from China, with an emphasis on a surge in the jet fuel segment.
Saudi Arabia, being the most influential oil exporter in the world, made an attempt to cease the moment by raising its delivery prices for Asian buyers. However, doubts about the matter, and whether this sort of emotional upward price zigzag could be transformed into a more long-lived one are still prevailing.
First and foremost, and hot on the heels of the Federal Reserve’s (Fed) meeting on February 1 is that oil markets, as well as most other commodities, did not buy into the enthusiastic idea of a recovery rally.
While the S&P 500 broad indicator of Wall Street decisively stormed its 4,200 multi-month peaks, and some outstanding tech shares grew by several percent, oil futures were under persistently negative pressure.
If, the North Sea benchmark was in a one-dollar distance from $90 per barrel milestone twice in the last week of January, then its price was well below $85 ahead of the Fed's announcement, and it went to $82.37 during the chair Jerome Powell's speech.
Keeping the downside sentiment intact, the lower range from $79 to $80 per barrel was tested three working days later, exactly on February 6.
Esperio analysts believe that an overstock in the U.S. was seemingly the main reason for the broad sell-off on fuel.
The fact was that crude inventories have risen by more than 32 million barrels since the beginning of January, according to official data by the Energy Information Administration (EIA), including another 4.14 million during the week ended on January 27.
That growth was clearly above the 376,000 barrels estimates. That was also too much compared to the rise of 533,000 barrels reported in the previous week to January 20.
If the short-term negative trend in oil prices does not change, it is unlikely that bets on a milder interest rate path from the Fed could outweigh recession fears.
Any downward developments of fuel prices traditionally serve as one of the leading recession indicators, which may contribute to a possible bearish developments in the stock markets as well.
Alex Boltyan, senior analyst of Esperio company
