Oil rises on bargain-hunting but oversupply fears cap gains

By Yuka Obayashi
TOKYO, March 24 (Reuters) - Oil prices edged higher on
Wednesday as investors looked for bargains following the
previous day's plunge, but gains were capped as pandemic
lockdowns in Europe and a build in U.S. crude stocks curbed risk
appetite and raised oversupply fears.
Brent crude futures LCOc1 rose 27 cents, or 0.4%, to
$61.06 a barrel by 0108 GMT, after tumbling 5.9% and hitting a
low of $60.50 the previous day.
West Texas Intermediate (WTI) crude futures CLc1 climbed
19 cents, or 0.3%, to $57.95 a barrel, having lost 6.2% and
touched a low of $57.32 on Tuesday.
Both benchmarks touched their lowest levels since early
February on Tuesday and have now fallen more than 14% from their
recent highs earlier this month. The front-month spread for both Brent LCOc1-LCOc2 and WTI
CLc1-CLc2 slipped into contango, where front-month contracts
are lower than the later months, a sign that demand for prompt
crude is declining.
"Investors adjusted positions from Tuesday's sharp selloff,"
said Kazuhiko Saito, chief analyst at commodities broker
Fujitomi Co.
"But the market sentiment remained bearish due to growing
concerns about demand recovery in the wake of new pandemic curbs
in Europe," he said.
Germany, Europe's biggest oil consumer, extended its
lockdown to April 18, and Chancellor Angela Merkel urged
citizens to stay at home for five days over the Easter holiday.
Worries over the pace of the recovery from the pandemic were
also heightened after a U.S. health agency said the AstraZeneca (NASDAQ:AZN)
Plc AZN.L vaccine developed with Oxford University may have
included outdated information in its data. Adding to pressure, U.S. crude oil stocks jumped by 2.9
million barrels in the week to March 19, against analysts'
expectations in a Reuters' poll for a decline of about 300,000
barrels, according to trading sources citing data from industry
group the American Petroleum Institute. But gasoline stocks fell by 3.7 million barrels, compared
with expectations for a build of 1.2 million barrels. EIA/S
Human rights sanctions on China imposed by the United
States, Europe and Britain, which prompted retaliatory sanctions
from Beijing, also added to market concerns.