Oil rebounds on bargain hunting

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Oil barrels
Singapore, Sept 23: Oil prices rose in Asian trade today (Sept 23) as bargain hunters sought cheaper crude following recent steep falls, analysts said.

New York's main contract, West Texas Intermediate for November delivery, gained 53 cents at USD 81.04 a barrel in morning Asian trade, after diving more than five dollars, or 6.3 per cent, in the US session on Thursday.

Brent North Sea crude for November settlement was up 71 cents to USD 106.20 after plunging USD 4.87 overnight.

"Oil is rising on bargain hunting and some short covering after it has been dropping for several sessions," said Ker Chung Yang, a commodities analyst for Phillip Futures in Singapore.

On Thursday's plunge in oil prices rode on the back of a surging dollar as investors flocked to the safe-haven currency on escalating fears about the weak economy and the threat of a new recession.

The US central bank has warned of significant downside risks to the world's biggest economy, which has yet to fully recover from a recession in 2009, the country's worst since the Great Depression in the 1930s.

A strong US currency dampens demand and leads to lower prices because it makes dollar-priced crude more expensive for holders of other units.

"Investors may stay on the sidelines," Ker said, as they wait for leads on the global economy. 

AFP

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