Oil prices down in volatile Asian trade
US benchmark West Texas Intermediate (WTI) for March delivery fell 68 cents to $52.37 while Brent crude for March eased 14 cents to $57.77 in afternoon trade.
WTI soared $3.48 to $53.05 Tuesday, its highest close since December 31, while Brent jumped $3.16 to $57.91, its best reading since December 30, as dealers cheered signs that the oil industry is tightening exploration activities to cap a supply glut.
Ken Hasegawa, an energy trading manager at Newedge Group in Tokyo, said the crude market was “extremely volatile” after the three-day rally that began Friday saw prices surge nearly 20 percent.
“It has become increasingly difficult to discern the direction of the prices of crude oil, but the fundamentals remain unchanged,” Hasegawa told AFP.
He added that prices could “fluctuate by increasing up to $10 and falling up to $10” in the short term.
Deep cuts in capital spending by major oil companies, including new announcements Tuesday by BP and BG Group, had suggested there would be tighter supplies in the future.
Last week, The Baker Hughes North America rig count report for the week to January 30 showed a drop of 128 rigs to 1,937. That compared with 2,393 a year ago.
Some analysts however remain doubtful that the current oil price rebound will be sustained as supplies still outweigh demand in the immediate term.
The oil market has lost more than half its value since June, when crude cost more than $100 a barrel, largely due to a surge in global reserves boosted by robust US shale oil production.
The problem was exacerbated in November after the OPEC cartel insisted that it would maintain output levels despite plunging prices. The 12-nation group pumps about 30 percent of global crude. (AFP)