Oil prices dip after rally but supply worries persist
Oil prices held most of the previous day’s strong gains today as a dive in US petrol stockpiles fuelled hopes for a pick-up in demand. But traders remain on edge over the long-running supply glut.
Both contracts soared yesterday, with US benchmark West Texas Intermediate hitting a three month high and Brent breaking $41 after a US energy department report.
The US figures showed that petrol inventories plunged three times faster than expected, while the country’s commercial crude stockpiles rose almost two-thirds less than forecast.
In early trade this morning, WTI had eased seven cents to $38.22 and Brent dipped 17 cents to $40.90.
Analysts said it remains to be seen whether the price rise would be sustained, especially after China this week reported a plunge in exports in February.
They said that the market was looking forward to a March 20 meeting of major crude producers to discuss an output freeze proposed by key players Russia and Saudi Arabia aimed at stabilising prices.
The meeting should provide vital clues about price development in the near term, but analysts have cautioned against too much expectations that an agreement will be reached.