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Crude oil prices steady in thin Asian trading ahead of Lunar New Year
[SINGAPORE] Crude oil futures held steady in lacklustre trading on Friday as Asian liquidity faded ahead of the Lunar New Year holiday across large parts of the region.
International benchmark Brent crude futures were trading at US$34.52 per barrel at 0304 GMT, up 6 cents from their last settlement. US crude futures were up 5 cents at US$31.77 a barrel.
Traders said liquidity was low due to the Lunar New Year holiday which will last for most of next week.
Oil prices have been extremely volatile since the start of the year, and in particular this week, as a string of bullish indicators like a slump in the dollar and potential talks on output cuts clashed with bearish reports of record US crude inventories, higher output and a slowing global economy.
BMI Research, a unit of rating agency Fitch Group, said on Friday that "bloated crude inventories in the US pose rising risk to WTI" and that "a continued build in storage over the coming six to eight weeks could collapse the price of WTI, driving a sharp reopening of the spread to Brent."
US crude inventories climbed 7.8 million barrels in the week to Jan 29 to 502.7 million barrels. Gasoline inventories rose to a record high, soaring 5.9 million barrels to 254.4 million barrels.
Brimming storage is contributing to an overall bearish market outlook as long as major producers don't reach an agreement on output, with China's economic slowdown now showing signs of spreading across the world.
"In spite of the record crude oil production ... demand for shipping is disappointing," said commodities brokerage Marex Spectron.
"The macroeconomic environment is bearish. Global industrial production, manufacturing and automotive demand indices all point towards weakening demand."