Oil sup­ply glut woes re­turn

The Myanmar Times - - International Business -

OIL prices edged up slightly in Asia yes­ter­day af­ter tum­bling more than 2 per­cent the day be­fore, while a weaker dol­lar also pro­vided sup­port, al­though fears about a global sup­ply glut are re­turn­ing to the fore.

Af­ter top­ping US$50 a bar­rel early last month on the back of out­put dis­rup­tions, the cost of crude has tum­bled about 15pc in re­cent weeks as the cru­cial US hol­i­day driv­ing sea­son comes to an end and global de­mand re­mains weak.

Traders have been spooked since last week when the US En­ergy In­for­ma­tion Ad­min­is­tra­tion said US in­ven­to­ries had fallen less than ex­pected, and that petrol sup­plies had risen, de­spite it be­ing peak sea­son for de­mand in the coun­try.

An in­crease in the num­ber of rigs com­ing on­line – mean­ing more pro­duc­tion – has also dented prices.

At about 6am GMT yes­ter­day, US bench­mark West Texas In­ter­me­di­ate was up $0.08 to $43.21 while Brent North Sea was up $0.15 at $44.87.

Both main con­tracts tum­bled on July 26 with crude touch­ing a three­month low while Brent touched its weak­est level since May.

“You can’t ig­nore the size of the in­ven­tory over­hang,” Evan Lu­cas, a mar­ket strate­gist at IG Ltd in Mel­bourne, told Bloomberg News.

“The fun­da­men­tals don’t sup­port a move up through $55 to $60 a bar­rel, but we’re not see­ing a ca­pit­u­la­tion like we did at the start of the year.”

The black gold plunged to near 13year lows below $28 in Fe­bru­ary, as world mar­kets were crip­pled by wor­ries over China’s econ­omy, weak de­mand, a global growth slow­down and a sup­ply glut. –

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