Oil prices down in Asian trade
Singapore: Oil prices fell in Asia today during more volatile trading as dealers fret over bulging global supplies and a strengthening US dollar, analysts said.
US benchmark West Texas Intermediate (WTI) slipped 47 cents to USD 44.37 while Brent was down 46 cents at USD 54.21 in late-morning trade.
WTI lost USD 2.21 and Brent plunged USD 2.41 on Friday after the International Energy Agency warned of US crude reserves reaching storage capacity with little sign of a slowdown in output despite a global glut.
“This week could be even more bearish for oil as there has been no shift in supply,” Michael McCarthy, chief market strategist at CMC Markets in Sydney, told AFP.
Singapore-based Phillip Futures said “with fundamentals remaining unchanged, we hardly find a reason for crude oil to break higher or even lower”.
The US Department of Energy last week said stockpiles in the world’s top crude consumer climbed to a fresh record high of 448.9 million barrels last week.
Crude prices lost some 60 per cent of their value to decline to about USD 40 between June and late January owing to an oversupply in world markets, a weak global economy and the strong dollar.
Prices have since rebounded following a slowdown in US oil-drilling activities, but analysts say volatility is likely to continue for some time.
“Behind the facade of stability, the rebalancing triggered by the price collapse has yet to run its course, and it might be overly optimistic to expect it to proceed smoothly,” the Paris-based IEA, which advises energy consuming nations, said in a monthly report released last week.
McCarthy said oil prices are also under pressure owing to gains in the US dollar against other major currencies ahead of a closely watched Federal Reserve policy meeting this week.
A stronger US dollar makes dollar-priced oil more expensive for buyers using weaker currencies, denting demand.