crude oil: outlook still bleak

Oil rebounded in Asia Monday as speculators hunted for bargains following a sharp decline last week, but analysts said prices remain weighed by an oversupply.

US benchmark West Texas Intermediate (WTI) for April delivery was up 15 cents to $50.96 while Brent crude for April gained 21 cents to $60.43 in afternoon trade.

WTI fell 4.66 percent and Brent tumbled 2.1 percent week-on-week last Friday, offering traders a buying opportunity.

“Prices fell off quite a bit last week so people are trying to enter positions right now thinking that they’re going to go up again,” said Daniel Ang, an investment analyst with Phillip Futures in Singapore.

“It’s more of a speculative increase,” he told AFP.

Ang said however that the rebound is unlikely to hold because of a global oversupply of the commodity, noting that US crude production has remained strong at above 9.2 million barrels per day.

He said a strike in US oil refineries has led to an excess of crude in the American market as less of the product is being sent to the facilities for refining.

Workers at three major US oil refineries operated with Royal Dutch Shell went on strike on Saturday in a dispute over safer working conditions, the United Steelworkers (USW) union said.

Around 1,350 employees in three refineries and chemical plants are affected by the latest strike action, which mirrored walkouts on other sites launched earlier this month.

Globally, crude supplies are also being boosted after oil fields in eastern Libya resumed pumping to the Hariga port after a pipeline was repaired, Bloomberg News reported.

And Oman, the biggest Middle East producer outside the Organization of Petroleum Exporting Countries, plans to ramp up output to 980,000 barrels a day this year, according to Bloomberg.

Crude prices lost about 60 percent of their value to about $40 between June and late January owing to an oversupply in world markets, a weak global economy and a strong dollar.

Prices have risen above multi-year lows on news that the number of US oil rigs in operation has fallen and energy giants are cutting back on investment, but market-watchers say volatility is likely to continue for some time.