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Oil markets rise as Asian stock markets catch a tailwind
[SINGAPORE] Crude oil prices rose on Wednesday as Asian stock markets caught a tailwind from a strong performance in the United States and Europe, although fuel markets remained generally dogged by oversupply.
Asian shares gained after upbeat German economic data powered rising US and European markets, and traders said the more upbeat sentiment in Asia had flowed through to oil markets.
The Brent global crude benchmark was trading at US$49.75 per barrel at 0313 GMT, 23 cents up from its last settlement after jumping 4 per cent in the previous session. US West Texas Intermediate crude gained 19 cents to US$46.13 a barrel after falling in the previous session.
In Japan, weekly crude and refined products statistics showed stable utilization rates and stock levels.
Despite Wednesday's gains, concerns remained that high global production was being met with a growing slowdown in demand, especially in the United States where the end of the summer driving season means slowing consumption.
Oil prices have fallen almost 60 per cent since June 2014 on a global supply glut, with prices seesawing in recent weeks as concerns about a slowing Chinese economy caused turmoil in global stock markets, while production remained near record highs. "Commodity price volatility remains high with markets trying to establish a new base against the headwind of weaker seasonal demand," ANZ bank said.
On the supply side, recent speculation that some producers were willing to cooperate in cutting output in support of prices was dealt a blow this week by Russia and Mexico, who both said they would not cut.
The Organization of the Petroleum Exporting Countries (Opec) is producing close to record volumes to squeeze out competition, especially from US shale producers, which have so far weathered the price plunges to keep pumping oil.
In oil politics, Opec said that Indonesia was reactivating its membership of the oil exporter club despite being a net crude importer.
If completed, the move would add almost 3 per cent to Opec's oil output, which is already close to a record high.
Indonesia would be the fourth-smallest Opec producer ahead of Libya, Ecuador and Qatar, and bring the number of participants to 13 countries.
Indonesia was the only Asian Opec member for nearly 50 years before leaving the group at the start of 2009 as oil prices hit a record high, and rising domestic demand and falling production turned it into a net oil importer.