Oil prices retreat in Asia as rally fizzles
Prices surged on Wednesday driven by bargain-hunting and a below-forecast rise in US commercial crude inventories, but concerns over the supply glut soon resurfaced.
At around 0700 GMT, US benchmark West Texas Intermediate (WTI) was down 30 cents at $45.76 and Brent crude was trading 24 cents lower at $48.56 a barrel.
“Crude oil (is) set to end October in the red, which will make it seven out of 10 months this year, as the global supply glut is showing no sign of abating,” Bernard Aw, market strategist at IG Markets Singapore, told AFP.
“US stockpiles continued to increase, with data from the US Department of Energy indicating that oil inventories remained more than 100 million barrels above the five-year seasonal average,” he said.
“Without a reduction in production, I don’t think there would be much of an upside to the international oil markets.”
WTI soared 6.3 percent and Brent rose 4.8 percent on Wednesday after US data showed domestic stockpiles increased less than expected, suggesting stronger demand in the world’s top oil consuming nation.
But optimism was short lived, and a rise in the US dollar after hints of a rate hike this year from the Federal Reserve, further dampened prices in Asian trade.
A strong greenback makes dollar-priced oil more expensive for customers using weaker currencies.
Oil markets have been overwhelmed with supplies this year as weak demand from a moribund global economy, especially from China, the world’s top energy-consuming nation, has failed to keep pace with production.
The Organization of the Petroleum Exporting Countries (OPEC) has maintained high production levels despite prices falling by more than half from peaks above $100 a barrel in June last year.