MELBOURNE- Oil prices rose in early trading on Thursday, regaining some of the ground lost in a 5 percent slump overnight, amid the prospect of tighter short-term supply with two-thirds of US output shut in the Gulf of Mexico as Hurricane Zeta slammed Louisiana.
US West Texas Intermediate (WTI) crude futures rose 29 cents, or 0.8 percent, to $37.68 a barrel, while Brent crude futures rose 25 cents, or 0.6 percent, to $39.37 a barrel.
Signs of a growing global supply glut and a second wave in the coronavirus pandemic sent prices tumbling in the previous session, but market watchers said technical support levels were a factor in trading on Thursday.
“The increase in volatility is attractive to traders. That proximity to the $37 support is one of the factors at play today,” said Michael McCarthy, chief market strategist at CMC Markets and Stockbroking.
WTI in the $36.45 to $36.95 range has proven to be a “buy zone” since the beginning of September, Axi chief market strategist Stephen Innes said. If the market fell through that, it would be a bearish sign, he said.
Hurricane Zeta’s impact is expected to be short-lived and the return of US production will add to oil oversupply, as Libya rapidly ramps up output after an eight-month blockade and soaring COVID-19 cases in the United States and Europe lead to new restrictions keeping people off the roads.