Oil extends recovery after recent selloff

June 06, 2024 (MLN): Oil extended its recovery following a sharp selloff, gaining for a second session despite Saudi Arabia signaling concerns over the demand outlook with cuts to its crude prices.

Brent crude climbed to $78.76 per barrel, up 0.45% on the day.

While West Texas Intermediate crude (WTI) was at $74.5 per barrel, up 0.58% on the day.

OPEC+'s plans to start returning supply to the market had pushed the benchmark down almost 9% over five sessions, pushing its 14-day relative strength index (RSI), a widely tracked measure of momentum below the level of 30 typically seen as oversold.

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, as Bloomberg reported.

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.”

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