Oil mixed in Asia on oversupply, Fed tapering concerns
Oil prices were mixed in Asian trade today as dealers worried about a global oversupply in crude, while speculation the US Federal Reserve will soon scale back its stimulus programme also weighed.
Singapore: Oil prices were mixed in Asian trade today as dealers worried about a global oversupply in crude, while speculation the US Federal Reserve will soon scale back its stimulus programme also weighed.
New York's main contract, West Texas Intermediate (WTI) for January delivery, was down one cent at USD 97.49 in mid-morning trade while Brent North Sea crude for January rose four cents to USD 108.71.
"Investors are not only concerned about an oversupply in the US from shale oil, but also from OPEC member countries like Iraq who have pledged to increase supply even if prices fall significantly," Kelly Teoh, market strategist at IG Markets in Singapore, told AFP.
The Organisation of Petroleum Exporting Countries (OPEC) earlier this month agreed to keep its production ceiling unchanged at 30 million barrels a day.
However, pledges by its members Iraq and Iran to boost output in 2014 have raised concerns about a potential glut, as US shale oil output continues to increase.
The focus on oversupply has also been exacerbated after a tribal chief in Libya said a months-long blockade by armed protesters of vital oil terminals would be lifted on December 15.
The protests as well as blockades of fuel deliveries by the Berber minority have slashed Libya's output to about 250,000 barrels per day from normal levels of nearly 1.5 million.
Prices were also under pressure as upbeat US economic data pointed towards a sustained recovery in the world's biggest economy and raised speculation the Fed will soon scale back its stimulus programme, Teoh said.
The oil market has been closely following the Fed's debate on when to wind its USD 85-billion-a-month stimulus down.
The onset of tapering will boost the greenback, making dollar-priced oil more expensive for countries using other currencies, dampening demand.