Oil prices up in Asian trade
OIL edged higher to near US$42 a barrel in Asia yesterday but analysts said the increase was unlikely to last as the commodity remains under pressure by a supply glut and a strong dollar.
Prices have been fluctuating since entering a bear market last week, falling more than 20 percent and closing below $40 a barrel for the first time since April.
Initially recovering as US commercial crude inventory data showed an unexpected draw in gasoline, prices tumbled again later in the week after robust hiring numbers from the US government pushed the US dollar higher.
A stronger greenback typically makes dollar-priced oil more expensive for consumers using other currencies, denting demand.
Weekly rig count data released August 5 also showed that US drillers added seven rigs that week, up for the sixthstraight week and indicating higher production activity amid an oversaturated market.
“Modest short covering has probably given oil some boost,” said IG Markets analyst Bernard Aw, adding that the bounce was unlikely to last.
US benchmark West Texas Intermediate for delivery in September was up 28 cents to $42.08 and Brent crude for October gained 29 cents to $44.56 a barrel yesterday.
“Upbeat jobs data from the US showed that the jobs growth was much higher in July than estimates, and helped to push the US dollar [higher], applying pressure on crude prices,” said EY Services oil and gas analyst Sanjeev Gupta.
“While markets will continue to look for clues from economic data from China and Eurozone, due to the overhang of high inventory levels and continuing concerns of oversupply, crude prices are likely move in a tight range over the next couple of weeks,” Mr Gupta added. –