World oil prices dipped, weighed down once again by abundant global crude supplies ahead of the weekly US energy inventories report.
US benchmark West Texas Intermediate (WTI) for March delivery slid 10 cents to USD 49.92 a barrel compared with yesterday’s close.
Brent North Sea crude for March dropped 59 cents to USD 55.84 a barrel nearing midday in London.
“Crude oil prices extended losses… as investors remain cautious regarding ongoing high builds of crude oil inventories,” said senior research analyst Myrto Sokou at the Sucden brokerage in London.
The market was also pulled lower by the strong greenback, which makes US-priced crude more expensive for buyers using weaker currencies and therefore tends to dent demand.
“The recent US dollar strength weighed heavily on market sentiment, while the ongoing large builds of crude stocks highlight a slowdown of oil demand worldwide,” Sokou said.
The US Department of Energy’s weekly petroleum report, due later Wednesday, is expected to show a 3.6 million barrel increase in stockpiles, according to a Bloomberg News poll.
Rising stockpiles indicate weaker demand in the world’s biggest economy and top oil-consuming nation.
Oil prices have been under pressure for months, plunging about 60 per cent to just over USD 40 a barrel between June and the end of January, dragged down by a weak dollar and abundant global supplies.
They have recovered some of their lost ground in recent weeks as the number of drilling rigs falls and energy firms begin to cut investment.
In earlier Asian trading hours today, oil prices had rebounded following sharp losses the previous day.
Nicholas Teo, market analyst at CMC Markets in Singapore, said the downbeat market outlook from the International Energy Agency had pushed both contracts down between three and five per cent yesterday.
The IEA report points to a “persistent global supply glut” for crude, Teo said.
The agency said in its five-year forecast that prices will recover slightly from current levels by 2020 but remain considerably below the USD 100-plus per barrel seen in June.