Tokyo - Oil prices rebounded in Asia on Wednesday following steep losses in the previous session, but analysts said gains were capped by a strengthening US dollar and persistent concerns about a global supply glut.
US benchmark West Texas Intermediate (WTI) climbed 58 cents to $48.87 while Brent rose 31 cents to $56.70 in late-morning trade.
WTI tumbled $1.71 and Brent fell $2.14 on Tuesday as the greenback soared against other major currencies.
A stronger US dollar makes dollar-priced oil more expensive for buyers using weaker currencies, denting demand.
Despite the gains on Wednesday, oil prices are under pressure as dealers expect the latest official US stockpiles report on Wednesday to be “bearish”, said Shailaja Nair, associate editorial editor at energy information provider Platts.
“This adds further to the global supply glut and ultimately will exert downward pressure to crude oil prices,” Nair told AFP.
US crude reserves likely rose 4.75 million barrels in the week ended March 6, according to a survey by Bloomberg News, which added that total supplies likely soared to 444.4 million, the highest level since the Energy Information Administration started compiling weekly inventory data in 1982.
Crude prices lost about 60 percent of their value to about $40 between June and late January owing to an oversupply in world markets, a weak global economy and the strong dollar.
Prices have since rebounded following a slowdown in US oil drilling activities, but analysts say volatility is likely to continue for some time.
The US Department of Energy's market outlook report released on Tuesday projected for this year “continuing large builds in US crude oil inventories, including at the Cushing, Oklahoma, storage hub”.
AFP