Oil prices dip in Asia after huge rally
August 31, 2015
US benchmark West Texas Intermediate for October delivery eased 79 cents to $44.43 while Brent crude for October fell $1.00 to $49.05 in late-morning trade.
WTI jumped $2.66 (6.3 percent) on Friday, capping its strongest weekly increase in four and a half years, while Brent surged $2.49 (5.2 percent) after prices plunged on concerns about China´s faltering economy.
Dealers said the rebound was largely due to news the US economy grew at an annual rate of 3.7 percent in the second quarter, up from a previous estimate of 2.3 percent, stoking hopes of a pickup in demand from the world´s top oil consumer.
"Better-than-expected US GDP numbers and the strong rally of global stock market were some of the contributing factors for the recovery in the price of crude," said Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at consultancy EY.
Oil has been on a roller-coaster ride in recent weeks over fears of a harder-than-expected slowdown in China, the world´s top energy importer, at a time when world markets are awash with supplies.
Signs of rising demand in the US have dragged prices up from six-and-a-half year lows, however, and "key manufacturing and unemployment data from the US and ongoing developments in Yemen will set the tone for prices in the coming weeks," Gupta said.
Dealers are closely monitoring fresh Saudi-led air raids in Yemen against Shiite Huthi rebels on Sunday, amid fears that the crisis in the country could threaten key crude producers in the Middle East.
Yemen has been gripped by growing turmoil since the Shiite rebels launched a power takeover in Sanaa in February. It borders major oil producer Saudi Arabia.
Daniel Ang, investment analyst at Phillip Futures in Singapore, said investors "remain wary of a volatile week ahead".
"We believe that bearishness is still in play, and thus, aim a support at $44.00 for WTI and $48.50 for Brent," he said.
