Oil prices inched up in Asia on Monday, August 1, as the dollar wobbled while bargain-buyers moved in following a recent sell-off.
At about 0630 GMT, US benchmark West Texas Intermediate for October delivery, a new contract, jumped by 20 cents, or 0.48 percent, to $41.80, and Brent was up 26 cents, or 0.26 percent, at $43.79.
However, analysts said the uptick was unlikely to be sustained and warned that a global supply glut and weak demand will temper gains.
Prices hit three-month lows last week after US data showed an unexpected increase in commercial stockpiles of oil and gasoline, adding to worries about a global crude supply glut.
News that the US economy grew slower than expected in April-June also raised questions about demand in the world’s biggest oil consumer.
However, the weak reading narrowed the chances of a US interest rate hike this year, sending the dollar tumbling, making oil cheaper for anyone using other currencies.
A chief strategist at CMC Markets in Sydney,Michael McCarthy, told Bloomberg News that: “There is a clear downward momentum to the market at the moment.”
“There are concerns about the oversupply situation continuing. Clearly $40 a barrel is a key point for West Texas and I’d expect to see support there given the bounces we’ve seen previously at that level.”
Sanjeev Gupta, an oil and gas analyst with EY, added that “crude oil prices continued to remain under pressure due to concerns over slower economic activity in the US, high inventory levels of crude and finished products, and media reports of higher output from OPEC in July”.
Energy information provider S&P Global Platts said production from the Organization of the Petroleum Exporting Countries surged 300,000 barrels per day in June, close to an eight-year high of 32.73 million barrels per day.
Sources: to www.cmcmarkets.com/en-gb/
