Oil prices up in Asia ahead of US crude inventories report

[SINGAPORE] Oil prices edged higher in Asia Wednesday, ahead of the release of a US stockpiles report, with investors also keeping an eye on a worsening diplomatic row between Iran and Saudi Arabia.

The US Department of Energy will release later Wednesday its weekly inventory of commercial crude, with analysts surveyed by Bloomberg News expecting an increase of 500,000 barrels.

At around 0320 GMT, US benchmark West Texas Intermediate for delivery in February was up six cents at US$36.03 and Brent was six cents higher at US$36.48. Both contracts closed lower on Tuesday.

Despite Wednesday's price uptick, the market mood remains bearish, said Daniel Ang, an analyst with Phillip Futures in Singapore.

The deepening diplomatic spat between key producers Iran and Saudi Arabia remains a factor affecting prices "but the market is oversupplied and traders are looking for opportunities to sell", he told AFP.

Kuwait on Tuesday recalled its ambassador to Tehran and Bahrain severed air links as the diplomatic crisis over Saudi Arabia's execution of a prominent Shiite cleric escalated, sparking international concern about regional instability.

In a separate commentary, Ang said weak global demand and an ongoing supply glut will continue to be a key influence on prices over the long term.

"Judging from how oil supply and demand (situation) is not expected to improve at least in the first half of 2016, it would suggest that oil prices would continue being bearish," he said.

AFP