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Oil Swings as Traders Weigh Greenland Crisis and Supply Outlook

(Bloomberg) -- Oil swung between gains and losses as traders weighed the fallout from the US push for Greenland.

Brent traded above $64 a barrel, after dipping lower earlier. President Donald Trump unleashed fresh social media attacks against allies, with European leaders signaling a strong response to potential US tariffs over the semi-autonomous territory of Denmark.

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The escalation of tensions has pressured stock markets, helped send gold and silver to record highs and raised the specter of a US-EU trade war that could dent global growth. But the impact on crude prices has been muted.

“Growth concerns as a result of tariff threats weigh on risk sentiment,” said Giovanni Staunovo, a commodity analyst at UBS Group AG. “Oil is — like equity markets — not immune to it.”

Oil remains under pressure from concerns about supply out-pacing demand, with the International Energy Agency forecasting a major overhang of more than 3.8 million barrels a day this year. However, supply disruptions have helped support prices, with Kazakhstan’s largest oil producer recently halting production at the Tengiz and Korolev fields after two fires at power generators.

“The outlook for a large surplus suggests prices should trend lower, while the potential for a further escalation in US-EU tensions poses further downside risk,” said Warren Patterson, head of commodities strategy at ING Groep NV.

Ahead of his Wednesday address in Davos, Trump renewed his push for Greenland, claiming the European Union wouldn’t resist too much. “We have to have it,” the president said, referring to the island.

Elsewhere, Middle Eastern crude prices are diverging, with heavier grades growing cheaper relative to lighter barrels — a shift that’s encouraging Asian refiners to favor medium and sour crudes to boost margins.

--With assistance from Yongchang Chin.