Oil prices down in Asian trade amid supply glut
Oil prices eased in Asia Tuesday as dealers weighed mainland China’s fresh monetary stimulus against a supply glut in the United States, analysts said.
U. S. benchmark West Texas Intermediate for May delivery declined four cents to US$56.34 while Brent crude for June fell 11 cents to US$63.34 in afternoon trade.
“The oil market is being pushed in two directions with the stimulus action by China going against the oversupply situation of crude in the United States,” Michael McCarthy, chief market strategist at CMC Mar- kets in Sydney, told AFP.
The People’s Bank of China Sunday cut by one percentage point the amount of cash lenders must keep in reserve, the second reduction this year and the latest easing measure aimed at kickstarting the world’s number-two economy. It has also cut interest rates twice since November.
Despite prices being lifted slightly on hopes that the mainland Chinese stimulus will spur demand, McCarthy said dealers remained concerned over surging U.S. production.
This is despite reports last week indicating that U.S. shale oil output may be on the cusp of easing, he said.
“We expect the U.S. stockpiles report (on Wednesday) to reflect an increase by three to four million barrels of production this week, a rebound from last week’s modest numbers,” McCarthy said.
The Department of Energy last week said U.S. oil production fell by 20,000 barrels to 9.38 million barrels per day, in the week ending April 10.
Analysts said that decline should help ease the global crude oversupply, which led to a collapse in prices of more than 50 percent between June and January.