Oil market rebounds

World oil prices rebounded Friday on bargain-buying, a day after the US benchmark fell below $80 for the first time in more than two years.

However, the overall mood remained clouded by a supply glut in and concerns over demand caused by a slowdown in major European economies and China.

US benchmark West Texas Intermediate for November added $1.29 to $83.99 a barrel.

Brent North Sea crude for delivery in November won $1.24 to stand at $87.06.

WTI prices had tumbled below the psychological support level of $80 on Thursday before a mixed crude inventory report spurred a rally.

The report by the US Department of Energy showed a 4.0 million barrel drop in gasoline inventories, much more than analysts had projected, indicating stronger-than-expected demand in the world’s biggest economy.

But the report also showed a build of 8.9 million barrels in crude stocks, much more than the 2.2 million projected.

Desmond Chua, market analyst at CMC Markets in Singapore, said buying sentiment kicked in after traders felt that “the sell-off (in oil) was a tad overdone”.

But analysts expect any advance to be limited, given the current high level of crude supplies and dwindling global demand, with key producers such as Saudi Arabia slashing prices to gain market share while maintaining output.

“The fundamentals for oil have not changed. Supply and demand factors still remain as they were at the beginning of the week,” Phillip Futures said in a note.

“We expect today’s increase in prices to be just an adjustment to the recent drop oil prices earlier in the week, and thus, unlikely to continue.”

burs/rfj/bcp/rl