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Oil prices down in Asia

Oil prices

Singapore : Oil prices fell in Asia today, giving up some of last week’s sharp gains as concerns of a global supply glut weighed on prices ahead of fresh US stocks data.

US benchmark West Texas Intermediate (WTI) for delivery in February was down 27 cents at USD 37.83 and Brent crude for February was trading 17 cents lower at USD 37.72 a barrel at around 0320 GMT.

Prices jumped last week after data showed an unexpected fall in US commercial crude stockpiles, with WTI adding almost 10 percent.

News the US will resume exports after a 40-year ban also helped to drive the country’s benchmark to a premium over London-traded Brent, which is seen as a measure of global prices.

“With no major economic news during the week, which will be a short trading week due to holidays, the markets will be looking closely for EIA’s weekly US crude oil inventory data,” said Sanjeev Gupta, head of the Asia Pacific oil and gas practice at EY.

Analysts predict the US Energy Information Administration will report another fall in US crude stockpiles on Wednesday, an indication of stronger demand in the world’s top oil consumer.

“Further evidence of continued draw-down in the US crude oil inventory could strengthen WTI in the near term and widen its spread over Brent,” Gupta said.

Oil prices have been under pressure since 2014 due to concerns about a persistent glut in world supplies and weak demand.

Daniel Ang, an investment analyst with Phillip Futures in Singapore, said the end of the US export ban could make that worse by encouraging the country’s shale producers to boost output.

“As we have always placed our hopes on decreasing US production to help ease the global oversupply, this could prolong any possible recovery to oil prices,” he said in a market commentary.

“Therefore, we would have to really keep a close eye on how US crude oil production would be going.”

The US export ban was imposed in 1975 to protect US energy supplies after the Arab oil embargo shook the American economy.

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