Oil prices climbed on Tuesday as concerns over tight supplies gained the upper hand on the market.
The West Texas Intermediate for August delivery added 1.62 U.S. dollars, or 1.6 percent, to settle at 104.22 dollars a barrel on the New York Mercantile Exchange. Brent crude for September delivery increased 1.08 dollars, or 1 percent, to close at 107.35 dollars a barrel on the London ICE Futures Exchange.
On Monday, both the U.S. crude standard and Brent jumped more than 5 percent.
The upswing came as concerns about supply tightness outweighed worries that fuel demand would be hit by a possible recession.
Goldman Sachs analysts said recently that the physical oil market is still “screaming that it’s very, very tight,” with physical Brent crude trading at a record premium over futures showing that tightness persists at current price levels.
Meanwhile, “prices were lent buoyancy by the weaker U.S. dollar and generally better market sentiment,” Carsten Fritsch, energy analyst at Commerzbank Research, said in a note Tuesday.
The dollar index, which measures the greenback against six major peers, fell 0.64 percent to 106.6820 in late trading on Tuesday, following a similar dip in the prior session. Historically, the price of oil is inversely related to the price of the U.S. dollar.
Traders also awaiting data on U.S. fuel inventories as the U.S. Energy Information Administration is set to release its weekly petroleum status report on Wednesday. Analysts surveyed by S&P Global Commodity Insights forecast U.S. crude stocks to show a fall of 200,000 barrels for the week ending July 15.