Oil volatility rose to a two-week high on Friday after the tanker seizure highlighted the risk of flows through the world’s most critical crude choke-point being disrupted. Meanwhile, falling production in Libya is now putting the spotlight back on supply threats after prices fell more than 8% in the four days through Thursday on signs of flagging demand in major global economies.
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“Crude has been weighed down by concerns that demand is slowing, but the focus is now shifting back to supply and geopolitical risks, which should support prices for the time being,” said Kim Kwangrae, a commodities analyst at Samsung Futures Inc. in Seoul.
West Texas Intermediate for August delivery increased 47 cents, or 0.8%, to $56.10 a barrel on the New York Mercantile Exchange as of 10:14 a.m. in Singapore after gaining as much as 60 cents earlier. The contract fell 7.6% last week.
Brent for September settlement rose 85 cents, or 1.4%, to $63.32 a barrel on the ICE Futures Europe Exchange. It closed 0.9% higher on Friday, paring the weekly loss to 6.4%. The global benchmark crude traded at a premium of $7.01 to WTI for the same month.
