Market News

Rob Verdonck and Alex Longley

(Bloomberg) -- Oil held near a seven-month low as turmoil eased on global equity markets and the halting of production from Libya’s biggest field refocused attention on the Middle East.

Global benchmark Brent traded a little above $76 a barrel, giving up earlier gains, after tumbling more than 5% over the previous three sessions. US equity futures gained following a global rout on Monday. Output from Libya’s Sharara field stopped completely, with dueling administrations again battling for control over the North African nation.

Traders are still bracing for a retaliatory attack by Iran and regional militias on Israel for assassinations of Hezbollah and Hamas officials, though Tehran has underlined that it wants to avoid all-out war.

Brent came within cents of $75 a barrel on Monday before rebounding on news of the Libyan supply loss and concerns that the conflict in the Middle East could impact production from the region. Traders are now assessing whether the global market selloff will be short-lived or whether it is a sign of a wider economic slump.

“The big question is if we are getting a recession or not,” said Bjarne Schieldrop, chief commodities analyst at SEB AB. “China oil demand has been weak this year and if the US now went into a recession it wouldn’t be good for oil at all.”

Goldman Sachs Group Inc. said it expects Brent futures to hold a floor of $75 a barrel. The limited risk of a US recession, resilient oil demand in developed nations and India, and room for an increase in speculative positioning should support prices, they said.

“The $75 floor under Brent oil prices will withstand macro fears,” Goldman analysts including Daan Struyven said in a note. “Prices will find support in the coming weeks.”

Investors will be looking to an industry report later Tuesday to gauge US crude inventories after five straight weeks of declines — the longest run since early 2022. Official data is due Wednesday.

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--With assistance from Yongchang Chin.