Oil Extends Gain Even as Saudi Price Cut Signals Demand Concerns

By Bloomberg

Jun 06, 2024

image is BloomburgMedia_SELQ4ODWRGG000_06-06-2024_06-06-21_638532288000000000.jpg

An oil pumping jack, also known as a 'nodding donkey,' operates in an oil field near Samara, Russia, on Tuesday, May 14, 2019. The nearby village of Nikolayevka in central Russia has emerged as the epicenter of an international oil scandal with authorities saying corrosive chlorides entered Russia’s 40,000-mile network of oil pipelines, causing the first-ever shutdown of the main export artery to Europe. Photographer: Andrey Rudakov/Bloomberg

(Bloomberg) -- Oil rose for a second session even as Saudi Arabia signaled concerns over the demand outlook with cuts to its crude prices.

Brent climbed toward $79 a barrel and West Texas Intermediate traded near $75, extending a modest recovery following a selloff after OPEC+ flagged plans to start returning supply to the market. The price decline had pushed both benchmarks into oversold territory on the 14-day relative strength index.

However, Saudi Aramco has lowered prices for all of its oil to Asia next month — the first reduction since February — raising concerns over the strength of demand in the world’s top crude importing region.

Oil has trended lower since early April on a dour outlook from top importer China and as geopolitical tensions eased. Supply from rivals of the Organization of the Petroleum Exporting Countries and its allies has also increased, raising concerns over whether the market can absorb the extra OPEC+ barrels.

US crude inventories rose by 1.23 million barrels last week, according to government data released Wednesday, adding to the bearish outlook. Gasoline stockpiles climbed for a second week to the highest since March.

“The market is showing resilience”, despite US stockpile builds, said Charu Chanana, an analyst at Saxo Capital Markets Pte in Singapore. “Traders found technical reasons to buy.”

By Yongchang Chin