TOKYO: Oil prices rose in Asia on Tuesday after a three-day sell-off that saw the US benchmark sink back below $30 a barrel, but analysts said the supply glut and world economic weakness would keep a lid on the commodity.
The pick-up in the two contracts comes despite a rout across Asian equity markets fuelled by renewed worries about the global outlook.
Traders had sent oil prices plunging Monday as talks between Saudi Arabia and Venezuela on bringing stability to the market came to nothing.
There had been hopes the Saudis would support calling a meeting of the OPEC producers’ group — of which it is the key member — but it was unwilling to do so.
OPEC has refused to cut output as it tries to maintain market share in the face of competition from US shale.
US benchmark West Texas Intermediate for March delivery sank 3.9 percent to $29.69 and Brent shed 3.5 percent to $32.88 Monday.
On Tuesday WTI was up 31 cents, or 1.0 percent, at $30.00 and Brent gained two cents, or 0.1 percent, to $32.90, a day before the US releases official data on its reserves which are at their highest levels since 1930.
Crude prices have crashed more than 70 percent since mid-2014, hit by a perfect storm of overproduction, oversupply, weak demand, a slowing global economy and a strong dollar.
Added to that is the imminent arrival of Iranian output onto world markets after international sanctions linked to its nuclear program were lifted.
“It’s a particularly volatile and difficult time for oil,” Ric Spooner, a chief analyst at CMC
Markets in Sydney, told Bloomberg News.
The market would continue to experience oversupply for the next few months, Spooner said.