SINGAPORE–Oil prices rose Wednesday in Asian trading hours as the U.S. and European benchmarks traded at parity after the lifting of a 40-year ban on American crude exports. At 0600 GMT New York’s West Texas Intermediate for February delivery was up 32 cents at US$36.46 a barrel.
London’s Brent crude for February stood at exactly the same price, 35 cents above its closing price in London. Analysts said an imminent report by the Department of Energy on U.S. oil inventories could reverse the recent gains of both crude varieties ahead of the long Christmas Day weekend.
WTI had risen to as much as US$36.56, Bloomberg News reported.
“Market participants cheered the Congress’s approval for the removal of the 40-year ban on U.S. crude exports,” said Bernard Aw, market strategist at IG in Singapore. The export ban was imposed in 1975 to protect U.S. energy supplies after the Arab oil embargo shook the American economy. Aw said the outlook for crude, which is around 60 percent off its high of above US$100 in summer 2014, was still “bearish” due to global oversupply. Another analyst said the WTI-Brent parity underscored the severe worldwide glut. “With WTI now pretty much at parity with Brent and Brent being the global oil benchmark, that really indicates a massive oversupply situation in the world,” Victor Shum, a Singapore-based vice president at consultancy IHS Inc., told Bloomberg News. Prices have particularly slumped since Dec. 4 when OPEC decided against limiting production despite tepid demand and a supply glut, as exporters fight to keep market share.