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Oil prices hold steady on lower US supplies
[SINGAPORE] Oil prices held steady in Asian trading on Friday after a fall in US crude inventories offset Opec's decision to shun production caps.
The commodity initially fell on Thursday after the Organisation of the Petroleum Exporting Countries ended its meeting in Vienna with no agreement, as expected, to lower or cap output despite a global supply glut.
However, it rebounded after a US Department of Energy report showed commercial crude inventories sank by 1.4 million barrels last week, indicating a pick-up in demand in the world's top crude consumer.
At about 0230 GMT, US benchmark West Texas Intermediate for delivery in July was two cents up at US$49.19 a barrel while Brent for August was four cents higher at US$50.08.
A final statement from Opec said that since its December meeting "crude oil prices have risen by more than 80 per cent, supply and demand is converging and oil and producer stock levels in the OECD (industrial economies) have recently shown moderation".
It added: "This is testament to the fact that the market is moving through the balancing process." IG Markets analyst Bernard Aw told AFP that Opec's failure to agree a new ceiling had been priced in by the market.
"The Opec meeting was of not much surprise and was a non-event," he said.
"For now prices are still sideways and still have that big US$50 hurdle to clear." Traditionally Opec, which pumps around a third of the world's oil, has cut production to boost prices.
But in the most recent prolonged drop, tumbling from more than US$100 in mid-2014 to close to US$25 in January, Opec - driven by Saudi Arabia - has changed tack, keeping oil flowing to maintain market share and squeeze competitors.
Mr Aw said a continued fall in US inventories, coupled with rising demand from China and India, could lead to a "fundamental change in supply and demand".
"The report shows that the US production and stockpiling is on the decline. That helps to ease the oversupply issue and is positive for oil prices," he added.
Crude prices briefly topped US$50 last week for the first time this year as short-term production disruptions in Canada and Nigeria eased concerns about global supplies.