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Oil prices down in Asian trade

Oil prices

Singapore:  Oil prices dipped in Asia today owing a stronger US dollar while investors expect the OPEC cartel to maintain output levels at a key meeting this week despite a global supply glut, analysts said.

US benchmark West Texas Intermediate for July delivery eased four cents to USD 60.16 while Brent crude for July fell eight cents to USD 64.80 in late-morning trade.

Singapore’s United Overseas Bank said prices “retreated…on the impact of a strong dollar and worries of stubbornly high supplies as OPEC prepared to meet this week to stick to production targets”.

The dollar was at 124.76 yen in Tokyo today, slightly lower than 124.81 yen late last night in New York but well above 124.12 yen on Friday and at highs not seen since December 2002.

A stronger greenback makes dollar-priced oil more expensive for buyers using weaker currencies, denting demand and pushing prices lower.

Analysts expect the Organisation of the Petroleum Exporting Countries (OPEC) to agree to continue pumping the same amount of oil when they hold their meeting in Vienna Friday.

The cartel produces about 30 per cent of the world’s crude.

OPEC refused in November to cut its daily output target of 30 million barrels — where it has stood for more than three and a half years — despite a global supply glut.

The move, which sent already falling prices plunging further, was widely regarded as a tactical attempt to boost demand and hurt non-OPEC output, particularly US shale producers.

Asked in Vienna if this strategy was working, Saudi Arabia’s Oil Minister Ali al-Naimi yesterday said: “The answer is yes… Demand is picking up. Supply is slowing. This is a fact. The market is stabilising.

“You can see that I am not stressed, that I am happy.”

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