Oil rises in early Asian trading, Middle East tensions remain in focus

The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant/File Photo

By Shariq Khan

(Reuters) – Oil prices edged higher in early Asian trading on Tuesday, reversing losses from the previous session, as investors continued to assess the risk from geopolitical concerns in the Middle East.

Global benchmark Brent crude oil futures rose 39 cents, or 0.5%, to $87.39 a barrel by 0033 GMT, while U.S. West Texas Intermediate crude futures were up 40 cents, or 0.5%, to $82.30 a barrel.

Both benchmarks fell 29 cents in the previous session on signs that a recent escalation of tensions between Israel and Iran had little near-term impact on oil supplies from the region.

However, analysts noted a multitude of risks remain in the oil market. ANZ analysts highlighted U.S. approval of new sanctions on Iran’s oil sector that broaden current sanctions to include foreign ports, vessels and refineries that knowingly process or ship Iranian crude.

“The geopolitical backdrop is still very fraught with so many risks at the moment, so clearly we’re going to see a lot of volatility until there’s a lot more clarity around it,” ANZ analysts said in a podcast.

Barclays analysts said on Monday that risks to their $90 a barrel forecast for this year’s Brent prices remain skewed higher.

“The imminent threat of geopolitical risk spilling over into oil market fundamentals has largely faded, but the overall trend in that risk since October last year is concerning,” the Barclays analysts said in a note.

U.S. crude oil inventories are expected to have increased last week while refined product stockpiles likely fell, according to a preliminary Reuters poll of analysts.

(Reporting by Shariq Khan in New York; Editing by Jamie Freed)