Oil prices extended gains in Asia today as volatile trading continued unabated with dealers divided on whether the beaten-down commodity has bottomed out, analysts said.

US benchmark West Texas Intermediate crude for March delivery rose 69 cents to $51.17, while Brent crude for March delivery gained 54 cents to $57.11 in late-morning trade.

WTI crude had yesterday jumped $2.73 in New York and Brent advanced $2.41, erasing losses earlier in Asia.

“Oil’s continuing whipsaw has largely been motivated by news surrounding inventory and supply side numbers,” said Nicholas Teo, market analyst at CMC Markets in Singapore.

“The battle between oil bulls and bears will likely continue tonight when the US weekly drilling rig count numbers are released,” Teo added.

Drilling rig count

Last week’s data showed a record drop of 94 oil rigs to 1,223 for the week ended January 30. That compared with 2,393 a year ago.

The drop, coupled with announcements of deep cuts in capital spending by major oil companies including BP and BG Group, has suggested there will be tighter supplies in the future.

Teo said “there are indications that the rig count will be lower” for the week to Friday.

Some analysts however remain doubtful about the impact of immediate-term dips in production levels as supplies continue to outweigh global demand.

Prices plunged around 60 per cent from their June peaks to a six-year low last week, largely owing to a surge in global reserves boosted by robust US shale production.

The problem was exacerbated in November after the OPEC cartel insisted that it would maintain output levels despite plunging prices. The 12-nation group pumps about 30 per cent of global crude.

Related Topics