Oil prices extend losses ahead of US report
Singapore : Oil prices fell in Asia today as persistent concerns about a global oversupply and caution ahead of a US stockpiles report chipped away at recent gains.
The commodity has seen healthy rises this month, after hitting near 13-year lows in February, thanks to a falling dollar and hopes that key producers will agree to output limits at an upcoming meeting in Doha.
With most global markets closed on Friday and yesterday for Easter, trade has been limited but investors are now focusing on the weekly US Department of Energy report inventories to gauge demand in the world’s top oil consumer.
At around 1150 IST today, US benchmark West Texas Intermediate (WTI) for May delivery was down 28 cents at USD 39.11 and Brent crude for May was 35 cents lower at USD 39.92 a barrel. Both contracts ended lower yesterday.
Sydney-based CMC Markets chief market strategist Michael McCarthy told AFP the price drop “does reflect the concerns about the rally that has brought us to these levels. It’s not sustainable and has run ahead of the actual recovery”.
He added: “We’ve got a huge inventory supply around the globe, not just in the US. Sustained upmoves are very hard to see and anything about USD 40 on the WTI is likely to be vulnerable to selling.”
McCarthy also said a pick-up in the dollar could be “the trigger for further downside” as it makes crude more expensiv for buyers with weaker currencies.