Singapore | Oil prices struck a muted tone Thursday, with the US benchmark sliding further after a jump in stocks last week added to concerns of a lasting world supply glut. Crude tumbled yesterday after the US said reserves surged 9.36 million barrels last week to 532.5 million barrels, much higher than market expectations. West Texas Intermediate for May delivery was down 11 cents at USD 39.68 while Brent for May was four cents higher at USD 40.51.
That huge build in crude inventories really suggests that, although we’ve had some relief, the overall supply situation remains imbalanced, said Sydney-based CMC Markets strategist Michael McCarthy. These are big numbers and the market can’t just shrug that sort of thing off. Oil has been under pressure because demand in major consumers like China has failed to keep up with production, leaving a huge excess of world supplies. A strengthening US dollar put further pressure on prices, after a Federal Reserve official said yesterday the US could raise interest rates as early as next month. A stronger greenback tends to hurt demand for dollar- priced commodities, as it makes oil more expensive for buyers using weaker currencies. We’ve been expecting US dollar strength to resume and it certainly has, McCarthy told AFP.
WTI rose last week above USD 40 for the first time since December, boosted by a sharp drop in the dollar. Renewed optimism that producers, including members of the OPEC cartel, would strike a deal to freeze output at a meeting in Doha on April 17 had also buoyed prices.
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