Oil prices slide fur­ther in Asia on global sup­ply glut

The China Post - - BUSINESS INDEX & -

Oil prices re­sumed their de­cline in Asia Mon­day as a global glut of crude sup­plies showed no signs of abat­ing in the face of slug­gish de­mand, an­a­lysts said.

U.S. bench­mark West Texas In­ter­me­di­ate (WTI) for Septem­ber de­liv­ery fell 51 cents to US$41.99 a bar­rel in af­ter­noon trade, the low­est since March 2009. Brent crude for Oc­to­ber, a new con­tract, was down 57 cents to US$48.62.

WTI and Brent’s Septem­ber con­tract rose in New York on Fri­day af­ter clos­ing at their low­est level in six and a half years in the prior ses­sion.

But oil came un­der re­newed pres­sure in Asia af­ter the latest data show­ing the num­ber of rigs drilling for U.S. oil in­creased last week, the sixth rise in seven weeks, an­a­lysts said.

The news added to fears of a pro­longed global sur­plus as out­put from the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries and the United States re­mains ro­bust de­spite the tum­bling prices.

“The com­bi­na­tion of el­e­vated stock­piles in the U.S. and in­creas­ing pro­duc­tion from OPEC, slug­gish de­mand growth, and a stronger U.S. (dol­lar) would con­tinue to pres­sure oil prices,” said Bernard Aw, mar- ket strate­gist at IG Mar­kets in Sin­ga­pore.

As oil is traded in the U.S. cur­rency, a strong dol­lar makes it more ex­pen­sive for in­ter­na­tional in­vestors, damp­en­ing de­mand.

“The de­val­u­a­tion of the yuan by China led to the weak­en­ing of other emerg­ing mar­ket cur­ren­cies,” said Sanjeev Gupta, who heads the Asia-Pa­cific oil and gas prac­tice at pro­fes­sional ser­vices firm EY (Ernst & Young).

“This spells neg­a­tive news for crude as a strong U.S. dol­lar makes crude ex­pen­sive for im­port­ing coun­tries, thereby cur­tail­ing de­mand.”

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