Brent crude oil prices rose more than a dollar to above $60.50 a barrel on Tuesday, tracking firmer Asian markets, but analysts warned the market remained oversupplied.
Most Asian stock markets edged up on Tuesday, bolstered by a record day on Wall Street, while a resurgent yen helped knock the U.S. dollar index off an 11-year high, makingcommodities priced in the greenback slightly cheaper for holders of other currencies. [MKTS/GLOB]
Data showing China's January crude oil throughput climbed 0.6 percent on year to 39.35 million tonnes, or 9.27 million barrels per day, also supported the oil market.
Front-month Brent futures LCOc1 were trading up $1 at $60.54 a barrel by 0632 GMT, just off the day's high of $60.74. U.S. WTI futures CLc1 were up 42 cents to at $50.01 a barrel.
A drop in U.S. rig counts is also boosting oil prices, analysts said.
"Brent crude prices (are) attempting to rally on rapid week-on-week reduction in U.S. ... rig count," Morgan Stanley said on in a note on Tuesday.
U.S. oil rig count fell by 33 rigs last week.
"The current U.S. horizontal and vertical rig count across the Permian, Eagle Ford, Bakken and Niobrara shale plays implies that U.S. oil production growth will reach 385,000 b/d (barrels per day) y-o-y by 4Q15, down 55 kb/d versus last week's rig count," Goldman Sachs said on Monday.
Despite the slowing rig count, U.S. production as well as output in the Middle East remains high, adding to an oversupplied market that could keep a lid on oil prices.
"Saudi, UAE, Iraqi and other Middle East production and exports (are) all higher TYD (to year date) adding to supply pressure," Morgan Stanley said.
Brent futures fell almost 5 percent on Monday as a build in U.S. inventories for seven straight weeks to a record high weighed on markets. [EIA/S]
The sharp drop in oil prices, down from over $100 last June, has, however, come as a boon for Asian importers who are seeing huge benefits as their fuel costs drop, analysts said.
"Cheap oil is a blessing for Asia, the drop in oil prices provide windfall effects for Asia's large net oil importers," ABN Amro said.
ABN said it expected cheap oil to improve growth in India, Hong Kong, Singapore and Thailand, but that China's slowing economy could still turn into a hard landing despite the gains from lower energy prices.
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