SINGAPORE: Oil prices rose in Asia on Tuesday, rebounding from sharp losses sparked by a report that Saudi Arabia was close to completing an oilfield expansion.
But analysts said the gains, partly prompted by a slightly weaker dollar, would likely be short-lived due to lingering worries about a global supply glut. Traders are also nervously awaiting the release of US stockpiles data on Wednesday.
At about 6:30 a.m. local time US benchmark West Texas Intermediate (WTI) for delivery in June was up 10 cents, or 0.23 percent, at $42.74 and Brent crude for June rose eight cents, or 0.18 percent, to $44.56.
Both contracts dived Monday after Bloomberg News said Saudi state oil company Aramco would complete the expansion of its Shaybah oilfield by the end of May, allowing the world’s largest exporter to maintain total capacity at 12 million barrels a day.
Those losses broke a week of gains on the back of upbeat data from China, the world’s biggest energy user, and speculation that talks to limit production could be restarted.
But Michael McCarthy, chief market strategist at CMC Markets in Sydney, told Agence France-Presse: “Although we are seeing some positive moves in our trading session today, they have come on very light volumes.”
He noted that attention would focus on Wednesday’s data on US commercial crude supplies, which are currently near historic highs.
Also Wednesday the Federal Reserve will end its latest policy meeting. While it is not expected to unveil any new measures, dealers will hope for some forward guidance on monetary policy and any future interest rate rises.
The world oil market has been hammered over the past two years by weak demand, overproduction, a slowing global economy—particularly China—and a supply glut.
Talks this month aimed at addressing the output problem collapsed in Doha as major producer Saudi Arabia refused to take part without key rival Iran.
Iran is unwilling to make output cuts as it returns to the market after years of Western-imposed nuclear-linked sanctions.