Oil market edges up; global supply glut may stymie rises
World oil prices rose on Monday, extending last week’s gains, but the persistent global supply glut will likely cap advances, analysts said.
U.S. benchmark West Texas Intermediate for delivery in May won 68 cents to US$52.32 a barrel.
Brent North Sea crude for May gained 79 cents to US$58.66 around midday in London.
“There has been a continuation in the rise of oil prices from Friday’s session, but the market has started this week cautiously due to the ongoing oversupply situation,” said Michael McCarthy, chief market with CMC Markets in Sydney.
Both contracts closed last week up more than 5 percent thanks to a drop in the number of U.S. oil rigs in operation, better economic data from Germany and easing expectations that Iranian oil would return to the market soon after a deal with Western powers over its nuclear program.
But Sanjeev Gupta, who heads the AsiaPacific oil and gas practice at professional services firm EY, said: “Increases in crude oil inventory in the U.S. and the announcement of record output of crude by Saudi Arabia in
strategist March helped to limit gains in benchmark prices.”
U.S. inventories in the week to April 3 surged nearly 11 million barrels to a fresh record high of 482.4 million, the U.S. Department of Energy said.
Meanwhile in Saudi Arabia, Oil Minister Ali al-Naimi announced output hit a record 10.3 million barrels a day in March.
The global oil market lost about 60 percent of its value to about US$40 per barrel between June and late January, owing largely to an oversupply in world markets and the OPEC oil cartel’s refusal to cut production.