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Wednesday, January 19, 2022

Oil prices slide on high supplies

Oil prices slide on high suppliesLONDON: Another surge in US stockpiles pushed oil prices lower on Thursday, giving up gains won after the US Federal Reserve cooled the chances of an early hike to interest rates.

US benchmark West Texas Intermediate (WTI) for delivery in April shed $ 1.52 to $ 43.14 a barrel.

Brent North Sea crude for May delivery lost 85 cents to stand at $ 55.06 in London midday deals.

WTI had gained $ 1.20 Wednesday and Brent jumped $ 2.40 after the US central bank signalled it was in no hurry to raise rates, which sent the dollar tumbling.

A weaker US currency makes dollar-priced oil cheaper for holders of rival currencies, fuelling demand.

But the rally was shortlived as the fundamentals of an oversupplied market and weaker demand took hold of sentiment following the US crude inventory report, analysts said.

The US Department of Energy on Wednesday said stocks jumped 9.6 million barrels for the week ending March 13.

“The report indicates a build up in the global supply glut that has been pushing prices down thus far,” said Shailaja Nair, associate editorial director at energy information provider Platts.

Daniel Ang, an investment analyst with Phillip Futures in Singapore, said prices would remain under pressure for as long as supply was outpacing demand.

“Fundamentals have not changed and just a short-term jolt in prices from the weakening US dollar will not change that fact,” he said in a market commentary.

“Prices are still going to stay low if demand and supply does not improve.”

World oil prices have collapsed by about 60 percent since June, with strong US production exacerbating elevated output by the OPEC cartel.

OPEC members meanwhile have no choice but to maintain current production levels despite falling oil prices in order to preserve their market share, Kuwait’s oil minister said on Thursday.

“Within OPEC, we don’t have any other choice than keeping the ceiling of production as it is because we don’t want to lose our share in the market,” Ali al-Omair told reporters.

But the minister welcomed any arrangements with non-OPEC crude producers to stabilise the market.

“If there is any type of arrangements with countries outside OPEC, we will be very happy,” Omair said after signing a cooperation agreement on oil and investment with Russia.

The 12-member Organization of Petroleum Exporting Countries, which pumps about one-third of the world’s oil, decided in November to maintain production unchanged, sending oil prices crashing.

Copyright AFP (Agence France-Presse), 2015

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