Oil ex­tends gains as fears over glut, US rates ease

The China Post - - BUSINESS INDEX & -

Oil prices climbed fur­ther in Asia Wed­nes­day, driven by hopes a crude sup­ply glut would ease and ex­pec­ta­tions the U.S. cen­tral bank would not raise in­ter­est rates in the near fu­ture.

A soft­en­ing of the U.S. cur­rency also helped bol­ster the com­mod­ity as the U.S. dol­larpriced com­mod­ity be­comes cheaper for hold­ers of weaker units, spurring de­mand, an­a­lysts said.

U.S. bench­mark West Texas In­ter­me­di­ate (WTI) for Novem­ber de­liv­ery rose 1.88 per­cent, or 91 cents, to US$49.44 and Brent crude for Novem­ber ad­vanced 1.17 per­cent, or 61 cents, to US$52.53 a bar­rel in af­ter­noon trade.

Prices fell to six-year lows in Au­gust on con­cerns about growth in main­land China, the world’s big­gest energy user, as well as high out­put in the United States and the Or­ga­ni­za­tion of the Petroleum Ex­port­ing Coun­tries, but have since crept higher.

The re­cent rally be­gan last week af­ter data showed a drop in U.S. drilling ac­tiv­ity, rais­ing hopes this would help ease the over­sup­ply.

The U.S. Depart­ment of Energy has forecast pro­duc­tion to de­cline to an av­er­age of 8.9 mil­lion bar­rels per day next year from 9.2 mil­lion in 2015.

Ex­pec­ta­tions that the U.S. Fed­eral Re­serve would not raise in­ter­est rates this year be­cause of the weak global econ­omy also boosted oil prices, an­a­lysts said. “We no longer look for lift-off un­til the first quar­ter of 2016. It may not come then ei­ther,” DBS Bank said.

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