Oil prices rose in Asia today lifted by a surge in equities following last week’s sharp gains on Wall Street, but analysts said that the prices remain weighed by weak demand in an oversupplied market.
US benchmark West Texas Intermediate crude for delivery in November climbed 47 cents to $83.22 a barrel in late-morning trade and Brent crude for December delivery added 17 cents to $86.33.
Both contracts ended marginally higher last week thanks to a minor dip-buying rally after prices tanked to multi-year lows.
Wall Street’s three main indexes surged on Friday on bargain-hunting and following upbeat earnings from General Electric and Morgan Stanley.
The Dow added 1.63 per cent, the S&P 500 jumped 1.29 per cent and the Nasdaq gained 0.97 per cent.
Adding to buying sentiment were dovish comments from officials at the US and British central banks at the end of the week.
However, any gains for oil prices will be tempered by weak energy demand as the global economy stutters, a supply glut and price-cutting by major producers such as Saudi Arabia.
“Long-held assumptions about the determination of key OPEC producers to support prices appear to be dissolving as Saudi Arabia signals to the market that it may be comfortable with a long period of low oil prices,” British bank Barclays said in a research note.
It added that “the oil market has several long-term bearish factors to grapple with.’’
The International Energy Agency had last week cut its forecasts for demand growth for the third month in a row.
For this year, it expects demand to rise 700,000 barrels per day to 92.4 million, which is 200,000 fewer than previously forecast.