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Friday, March 24, 2023

Oil prices retreat in Asia as rally fizzles

Oil prices retreat in Asia as rally fizzlesSINGAPORE: Oil prices declined in Asia Friday as a midweek rally dissipated with no relief in sight to a global crude oversupply, analysts said.

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 as output levels remain elevated.

At around 0245 GMT, US benchmark West Texas Intermediate (WTI) was down 23 cents at $ 45.83 and Brent crude was trading eight cents lower at $ 48.72 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 rose 6.3 percent and Brent soared 4.8 percent on Wednesday.

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.

Demand has not been able to soak up the excess supplies due to a slowdown in the global economy, especially in China, the world’s top energy-consuming nation.

Adding downward pressure on prices is a hint from the Federal Reserve Wednesday that it could lift US borrowing costs before 2016, pushing up the dollar. A strong greenback makes dollar-priced oil more expensive for customers using weaker currencies.

Copyright AFP (Agence France-Presse), 2015

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