Global oil prices plummet over supply glut concerns
Oil prices have fallen in Asian markets as concerns about a global supply glut continued to weigh on prices in anticipation of new data on US crude stocks.
On Monday, US benchmark West Texas Intermediate (WTI) for delivery in February shed 34 cents to be sold at $37.76 a barrel while Brent crude for February was traded 12 cents lower at $37.77 per barrel.
Oil prices jumped last week after new data was released showing an unexpected fall in US commercial crude stockpiles, with WTI gaining almost 10 percent, AFP reported.
News about the US probably deciding to resume oil exports after a 40-year ban also helped to drive the country's benchmark crude to a premium over London-traded Brent, which is considered as a measure of global prices.
"With no major economic news during the week, which will be a short trading week due to holidays, the markets will be looking closely for EIA (Energy Information Administration)'s weekly US crude oil inventory data," said Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at EY.
Analysts also predicted on Monday that the US Energy Information Administration will report another fall in US crude stockpiles on Wednesday, which is taken as an indication of stronger demand in the world's top oil consumer.
"Further evidence of continued drawdown in the US crude oil inventory could strengthen WTI in the near term and widen its spread over Brent," Gupta noted.
Global oil prices have been under downward pressure since 2014 as a result of concerns about a persistent glut in world supplies in the face of weak demand.
Daniel Ang, an investment analyst with Phillip Futures in Singapore, said the end of the US export ban could make market supply glut even worse as it will encourage the country's shale producers to increase their output.
"As we have always placed our hopes on decreasing US production to help ease the global oversupply, this could prolong any possible recovery to oil prices," he said in a market commentary, adding, "Therefore, we would have to really keep a close eye on how US crude oil production would be going."
The US imposed a ban on exporting crude in 1975 in order to protect the country’s energy supplies after the Arab oil embargo shook the American economy.
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