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Friday, June 2, 2023

Oil prices climb, but stay in bear market territory

SINGAPORE (Reuters) – Oil prices rebounded in early Asian trade on Friday after settling at their lowest in months in the previous session as worries over the demand outlook and continued oversupply weighed on the market.

U.S. crude for September delivery traded 39 cents higher at $ 48.84 a barrel by 0105 GMT, after closing down 74 cents, the lowest settlement since March 31.

The benchmark has slumped more than 20 percent in the past six weeks, a slide which is considered by many traders to constitute a bear market.

Brent September crude was up 32 cents at $ 55.59 a barrel. The contract had settled at its lowest since April, down 86 cents.

Both benchmarks are on track to post double-digit losses this month, in part pulled lower by expectations of higher Iranian exports following a deal over its nuclear programme with world powers.

U.S. crude is down 17.8 percent so far this month and Brent is down 12.6 percent.

A weakening dollar supports oil prices as it makes it cheaper for holders of other currencies to buy dollar-denominated commodities.

Oil prices could find additional support if the world’s top exporter Saudi Arabia cuts production after the summer in reaction to lower seasonal domestic demand, as stated in a report by an industry publication on Thursday.

With a dim outlook for oil prices, the world’s top oil companies could be forced into more spending cuts, as they are set to report yet another sharp drop in quarterly profits, according to analysts.

“Oil companies are hunkering down for a downturn that will take longer than some initially thought,” said Martijn Rats, head of European oil and gas equity research at Morgan Stanley.

(Reporting By Jacob Gronholt-Pedersen; Editing by Richard Pullin)

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