Oil extends gains as fears over glut, US rates ease
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.