Oil prices push higher after entering bear market

A maze of crude oil pipes and valves are pictured at the Strategic Petroleum Reserve in Freeport, Texas.
A maze of crude oil pipes and valves are pictured at the Strategic Petroleum Reserve in Freeport, Texas. PHOTO: REUTERS

SINGAPORE (AFP) - Oil prices pushed higher on Tuesday (Aug 2), scraping back losses as bargain-buyers took advantage of a weaker US dollar, the day after slipping into a bear market.

Crude dipped below US$40 a barrel on Monday after US data pointed to an unexpected increase in commercial oil and gasoline supplies, adding to concerns about a lasting supply glut.

Oil settled down more than a fifth from its June highs in New York, meaning it is now in a bear market by the most common definition of the term.

Prices scraped back some of their losses on Tuesday after disappointing US GDP growth figures hurt the greenback, making dollar-priced oil cheaper for those using other currencies.

At about 0300 GMT, US benchmark West Texas Intermediate for September delivery was up 14 cents to US$40.20 a barrel while North Sea Brent for October rose 24 cents to US$42.38.

"Demand growth remains lacklustre and has not made significant inroads to clear the inventory overhang for oil," British bank Barclays said in a research note.

"There is no better time to do that during the summer, but summer is already halfway over." David Lennox, an analyst at Fat Prophets in Sydney, told Bloomberg News the supply glut will continue to weigh down the oil market.

"We still think the US$40 a barrel level is an area where the price will hold because we have seen it bounce off there before," he said.

Investors are awaiting industry data on US crude supplies due later Tuesday, a day ahead of official figures by the US Department of Energy.