Oil recovers in Asia, glut worries persist
After days of a turbulent price ride, oil rose in Asia on Thursday, giving a much-needed breather to the battered crude market, but traders remain on edge as the supply glut and weak demand that has sent prices to more than 12-year lows shows no sign of letting up. However, some analysts are saying the price is unlikely to fall below US$ 20.
By : migrator
Update: 2016-01-21 22:41 GMT
Singapore
The battered commodity has taken a hammering so far in 2016, with both main contracts already down about 25 percent. On Wednesday, US benchmark West Texas Intermediate fell below USD 27 a barrel for the first time since May 2003, days after Brent touched below USD 28.
The price of oil has crashed about 75 percent since mid 2014, hit by an oversupply, overproduction, weak demand and a slowdown in the global economy, especially China.
“With oil already hitting such a low, fundamentals are the key issue right now,” said Phillip Futures analyst Daniel Ang, referring to supplies continuing to outrun demand. “I would think the bearishness will continue into the first half of the year, but in terms of hitting a bottom, we are more or less there,” Ang said.
“I’m really sceptical of prices hitting below USD 20,” he said, adding that “USD 24USD 25 will likely prove a very strong support that shouldn’t break.”
The Paris-based International Energy Agency (IEA) warned this week that the oil market could “drown in oversupply”, with the return of Iranian crude after the lifting of western sanctions offsetting any output cuts from other countries.
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