Oil prices fell in Asia today after enjoying a strong rally in the previous session in response to news that leading petroleum producers are curtailing investment.
US benchmark West Texas Intermediate (WTI) for March delivery fell 13 cents to $51.08, while Brent crude for April delivery was down 17 cents at $59.11 in mid-morning trade.
WTI crude gained $2.37 in New York, while Brent crude for March delivery surged $2.39 on its last day of trading.
Daniel Ang, investment analyst at Phillip Futures in Singapore, said dealers are wary about the impact of such cuts in the immediate term.
“We will continue to see range-bound trading in the immediate term with little change to fundamentals,” Ang told AFP.
“The main thing is crude production. As long as production levels don’t go down for now, it is hard to see a reversal of low oil prices,” he said.
“Markets seem to be ready for prices to go up again. They are just waiting for a sign that production will be significantly cut.”
A US stockpiles report on Wednesday showing crude reserves standing at an 80-year high for this time of the year has exacerbated concerns about a global supply glut.
Oil prices have been under pressure for months, plunging about 60 per cent to just over $40 a barrel between June and the end of January.
However, they have recovered slightly in recent weeks as the number of drilling rigs has fallen and oil companies such as Total and Royal Dutch Shell trimmed some investment.