Oil prices rebound in Asian trade but gains capped
US benchmark West Texas Intermediate (WTI) for March delivery rose 42 cents to $48.87 while Brent crude for March gained 71 cents to $54.87 in late morning trade.
Crude prices on Wednesday snapped a three-day rally, with WTI sinking 8.7 percent owing to mounting stockpiles.
Analysts said Thursday’s rebound was unlikely to be supported after the single currency retreated on news that the European Central Bank had cut off Greek banks’ access to a key source of much-needed cash.
In a decision that rattled global financial markets, the ECB said Wednesday it would no longer allow Greek banks to use government debt, which has a junk rating, as collateral for loans.
“The Greek situation is worth keeping an eye on as it massively impacts the value of the euro against the US dollar,” said Shailaja Nair, associate editorial director at energy information provider Platts.
A sinking euro makes dollar-priced oil more expensive, denting demand and adding downward pressure on crude prices, which have already been battered by a supply glut and weak demand.
Crude has lost more than half its value since June, when prices were at more than $100 a barrel.
Global supplies have been boosted by surging US shale oil production and a decision by the Organization of the Petroleum Exporting Countries in November to keep current output levels.
Greece’s Syriza Party won last month’s election on an anti-austerity platform, sparking fears the country will default on its debt obligations and exit the eurozone currency union.
Syriza wants to renegotiate the terms of Greece’s 240-billion-euro ($269 billion) bailout deal with the European Union and the International Monetary Fund which the party says is stifling any chance Greece has of economic recovery. (AFP)