Oil prices slid back close to opening levels at around US $60.20 per barrel on Tuesday, after gaining earlier in the day on expectation of firm economic data from the United States due later in the day on Tuesday.
After touching an intra-session high of US $56.85 a barrel, US crude prices in futures trade dipped back to US $55.67 at 1:15 pm. Brent crude prices were up 9 cents at US $60.20 a barrel.
Analysts said expectations of firm US economic data later in the day had pushed prices higher in thin Asian trading due to a public holiday in Japan.
"The focus of today would likely come from US durable orders and US GDP figures. Durable goods orders depict a strong manufacturing sector which implies a higher industrial use of crude oil," said Singapore-based Phillip Futures in a report on Tuesday, adding, "With the US economy picking up, we expect the figures to be favorable."
Tuesday's price rises followed a volatile session on Monday, when Brent crude prices first jumped to almost US $63 a barrel on the back of strong international market performances before sliding back to a little over US $60 after Saudi Arabia's powerful oil minister said Organization of the Petroleum Exporting Countries (OPEC) would not cut production at any price.
"Brent could drop below US $60 per barrel over the next six months, and WTI (West Texas Intermediate) could fall to US $50, as global oil inventories build sharply from here," Bank of America Merrill Lynch said in a research note.
While the reluctance of producer club OPEC to cut output has pulled down prices, oil could receive some support from falling activity in the United States, where many drillers are struggling to make money at current price levels.
"US oil drilling has begun to fall sharply. We expect this fall to continue apace throughout Q1, unless there is an unexpectedly early move up in oil prices," Standard Chartered said in a report.
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