Oil prices extended gains in Asia Wednesday as traders await a report on US stockpiles, and some analysts said the market was set for a rebalancing after touching bottom.
The two main contracts — West Texas Intermediate (WTI) and Brent crude — had risen sharply in European trading Tuesday on speculation that Saudi Arabia plans to reduce drilling, fuelling hopes of an easing of the global supply glut.
A weak dollar has also provided support as it makes crude cheaper for customers using other currencies.
At around 0640 GMT Wednesday WTI for delivery in June was up 53 cents, or 1.20 percent, at $44.57 and Brent crude for June had risen 58 cents, or 1.27 percent, to $46.32.
“Market sentiment continues to improve,” said Tim Evans, an energy analyst at Citi Futures Perspective in New York. “A lot of people are convinced that the bottom has been reached and the market will rebalance later this year.”
However, Platts associate editorial director Shailaja Nair told AFP she “would still be cautious against the sustainability of this rise because the world is still awash with oil”.
From mid-2014 crude plunged more than 70 percent to near 13-year lows at the start of the year owing to a supply glut, weak demand and a slowdown in the global economy.
But while talks between major producer to address the crisis collapsed on April 17, signs of a pick-up in China’s economy and a strong US recovery have helped prices rise to year-to-date highs.
Traders will be keenly watching the release of an energy department report on US supplies later Wednesday. On Tuesday the American Petroleum Institute reported a surprise drop in stockpiles, according to Bloomberg News.
The Federal Reserve will end a much-anticipated policy meeting later Wednesday, which will be closely followed for clues about the state of the US economy and the central bank’s timetable for raising interest rates.