SINGAPORE — Oil prices began shedding gains in late Asian trade on Tuesday after rebounding from sub-US$35 levels in New York ahead of an expected hike in U.S. interest rates. With global oversupply still dictating price trends, U.S. benchmark West Texas Intermediate for delivery in January dipped 11 cents to US$36.20 at 0615 GMT, while Brent crude for January was 16 cents lower at US$37.76.
WTI had fallen briefly in New York below US$35 a barrel, the lowest levels since February 2009 during the global financial crisis. Ted Sloup of iiTrader.com called the rebound “a healthy correction” in a technically oversold market but added that the mood was “still very bearish” as investors continued to worry about global oversupply. BMI research said in a report that more downside pressure is expected in the coming months. “Oil prices will remain anchored by oversupply,” it said, predicting that the global surplus “will only narrow significantly post-2018”. Prices have fallen more than 60 percent from levels above US$100 in June last year owing to slack global demand and a slowdown in key markets including mainland China. Also, the world market is awash with the commodity as the OPEC exporters’ group refuses to cap production in a move to preserve its market share, while Iran is expected to restart pumping its own crude for shipment in 2016 after sanctions linked to its nuclear program are lifted. An anticipated U.S. interest rate hike on Wednesday could put further pressure on oil demand because the commodity is priced in U.S. dollars, making it more expensive for economies with weaker currencies.