Crude oil futures were higher during mid-morning trade in Asia Tuesday amid bargain hunting, following an overnight slide that saw prices drop by more $1/b.
Receive daily email alerts, subscriber notes & personalize your experience.Register Now
At 10:10 am Singapore time (0210 GMT), ICE June Brent crude futures were up 21 cents/b (0.29%) from Monday's settle at $71.63/b, while the NYMEX May light sweet crude contract was up 25 cents/b (0.38%) at $66.47/b.
Both the benchmark contracts fell by more than $1/b as traders digested the limited scope of US-led strikes on the Syrian regime over the weekend.
"Oil prices gain given the increased risk premiums from the intensified geopolitical tensions, though historical reference has proved the rally to be very short-lived, thus explaining the fall in oil prices overnight," OCBC Commodity Economist Barnabas Gan said.
"Nonetheless, the geopolitical tensions have by no means evaporated, and could soon ignite a renewed price rally," Commerzbank analysts said.
Prices also found some support from fundamental news with Kuwait's oil minister Bakheet Al-Rashidi commenting that OPEC will be reviewing its production cut agreement in June and that the producer group will continue with its cuts through 2018.
While it will be discussed in June, a decision on whether to extend the deal into 2019, would be taken later this year, Rashidi had told journalists on the sidelines of the Kuwait Oil and Gas Summit.
"With the Joint Monitoring Committee meeting in June, members have started positioning themselves ahead of discussions around the production cut agreement, " ANZ analysts said in a note Tuesday.
Oman's oil minister Mohammed al-Rumhy, who signed up to the cuts as a non-OPEC producer, warned that the group should not consider its job done yet.
"We have not reached the steady state conditions yet and the game is not over. The uncertainty monkey is still on our shoulder and it's not the time to offload that," he said at the same conference.
Meanwhile, market participants will also be looking out for latest data on US inventory levels due for release by the US Energy Information Administration on Wednesday to provide price direction.
Analysts surveyed Monday by S&P Global Platts were looking for US crude stocks to have risen by 625,000 barrels for the week ended April 13. Distillate and gasoline stocks are expected to have declined by 1.6 million barrels and 1.9 million barrels, respectively, for the same period.
As of 0210 GMT, the US Dollar Index was up 0.01% at 89.14.