Singapore | Oil prices rose on bargain-buying in Asia today after hitting two-month lows but gains were hobbled by concerns about an oversupply and weak demand after the IMF lowered its global economic growth forecasts. Investors are playing a holding game ahead of the release later in the day of official US stockpiles figures, which will provide a better handle on the outlook in the world’s top oil consumer.
Supply disruptions that lifted prices from near 13-year lows in February have eased and the situation in Turkey is stabilising after the weekend’s failed coup attempt, turning attention back to the supply issue.
At around midday, US benchmark West Texas Intermediate rose 11 cents, or 0.25 per cent, to USD 44.76 and Brent added 19 cents, or 0.41 per cent, to USD 46.85. WTI fell three percent in the previous two days, while Brent lost two per cent in the same period.
Yesterday, the International Monetary Fund cut its growth estimate for the world economy by 0.1 percentage points for both this year and next, citing the effects of Britain’s shock decision to leave the European Union. CMC Markets client services executive Alex Furber said oil was also taking a hit from renewed strength in the dollar, which makes the commodity more expensive for anyone holding weaker currencies. He added that he saw the dollar rising further. The greenback has picked up in the past two weeks on growing speculation the Federal Reserve will lift interest rates before the end of the year following a string of upbeat data, including a forecast-busting reading on jobs creation.
Crude prices have fluctuated between USD 44 and USD 52 per barrel in the past month, after falling below USD 30 in February on the back of the world supply glut and weak demand.
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