SINGAPORE, Jul 22: Oil prices resumed their decline in Asia Wednesday following a US report showing that stockpiles surged last week, with analysts warning of further weakness ahead.
Ahead of an official report, the industry-funded American Petroleum Institute said stockpiles had increased by 2.3 million barrels last week.
US benchmark West Texas Intermediate for September delivery fell 68 cents to $50.18 a barrel and Brent crude for September tumbled 52 cents to $56.52 in afternoon Asian trade. Both contracts had posted gains Tuesday.
“Crude prices remain under pressure as the supply overhang continues to persist,” said Bernard Aw, market strategist at IG Markets Singapore.
Wednesday’s official Energy Information Agency data “will be closely monitored, although it is evident that the supply glut problem is expected to stay for a while longer”, Aw added.
Oil prices have tumbled from more than $100 a barrel in June last year as strong production from the United States and the Organization of the Petroleum Exporting Countries led to supply outpacing demand.
Concerns over the return of Iranian oil to the market following a deal with major powers on its nuclear ambitions have also depressed prices.
The deal — which aims to prevent Iran from building a nuclear weapon — allows for the lifting of crippling economic sanctions on the country, enabling it to ramp up shipments of oil.
A strong greenback, boosted by the prospect of higher US interest rates, has also dented demand for dollar-priced oil and helped push prices downwards.