Oil prices re­bound in Asia; over­sup­ply hob­bles gains

Kuwait Times - - BUSINESS -

SIN­GA­PORE: Oil prices re­bounded in Asia yes­ter­day but buy­ing sen­ti­ment re­mains slug­gish owing to sup­ply glut woes and a strong dol­lar. Traders are wait­ing for the release later in the day of a US Depart­ment of En­ergy re­port on com­mer­cial stock­piles in the world’s top oil con­sumer which is ex­pected to show an in­crease and fur­ther con­firm the over­sup­ply. An­other key fo­cus is the release later of min­utes from last month’s Fed­eral Re­serve pol­icy meet­ing, with deal­ers look­ing for hints on whether it will raise in­ter­est rates at its gath­er­ing next month. Spec­u­la­tion has mounted in re­cent weeks that the cen­tral bank will pull the trig­ger fol­low­ing a string of pos­i­tive US eco­nomic fig­ures.

A hike would likely boost the dol­lar and make dol­lar-priced oil more ex­pen­sive for those hold­ing weaker units, de­press­ing de­mand. At around 0600 GMT, US bench­mark West Texas In­ter­me­di­ate for de­liv­ery in De­cem­ber was up 31 cents at $40.98, while Brent crude for Jan­uary was trad­ing 34 cents higher at $43.91. “Strong US em­ploy­ment data and state­ments by (pol­icy board) mem­bers crys­tal­lized mar­kets’ expectations of a De­cem­ber rate hike, caus­ing the trade-weighted dol­lar to rise by more than 5.0 per­cent,” Cap­i­tal Eco­nomics said. “This sharp ap­pre­ci­a­tion has weighed heav­ily on (com­mod­ity) prices over the past month.”

Adding to the sup­ply glut woes was a state­ment Tues­day by Ira­nian Oil Min­is­ter Bi­jan Zan­ganeh that Tehran will not ne­go­ti­ate with OPEC over its planned 500,000 bar­rels per day (bpd) pro­duc­tion hike once western sanc­tions are lifted. “We will not ne­go­ti­ate with OPEC to in­crease our pro­duc­tion. We will only no­tify them when we adapt,” he told re­porters in Tehran, re­fer­ring to the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries. Sanc­tions on Iran are ex­pected to be lifted in early 2016 fol­low­ing a land­mark deal in July with ma­jor pow­ers to curb the coun­try’s nu­clear am­bi­tions. Iran will fol­low its out­put rise with an ex­tra one mil­lion bpd a year later, Zan­ganeh said. An­a­lysts have said the ex­cess sup­plies on global mar­kets that have de­pressed crude prices for more than a year are likely to stretch well into 2016. —AFP

TOKYO: Peo­ple walk past an elec­tronic stock indi­ca­tor of a se­cu­ri­ties firm in Tokyo yes­ter­day. Asian stocks were mostly higher yes­ter­day as the shock of the Paris terror at­tacks faded and an uptick in US in­fla­tion added sup­port for a pos­si­ble in­ter­est rate hike. —AP

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