Oil edges back above $30 as glut worries persist
NEW YORK -Oil prices rose above $30 on Tuesday after briefly dipping below the psychological barrier as the market was beset with worries about the global supply glut.
At about 1100 GMT, Brent North Sea crude for delivery in March was up 11 cents at $30.61 a barrel.
US benchmark West Texas Intermediate for March added nine cents to $30.43 a barrel compared with Monday's close.
In rollercoaster trade last week, oil briefly plunged to 12-year lows under $27 but bounced higher Friday on hopes that more possible stimulus measures in the eurozone and Japan would perk up demand.
However, the rally almost fizzled out Monday as stubborn oversupply fears resurfaced.
"The expectations around central banks unleashing stimulus measures ... provided false hopes for bullish investors, who have fallen victim to the sharp declines led by the intensifying concerns around the excessive oversupply of oil," said research analyst Lukman Otunuga at traders FXTM.
WTI shed 5.7 percent and Brent lost 5.2 percent in value on Monday.
"The catalyst for yesterday's slippery crude sell-off that took the commodity back below $30 was put down to continued global oversupply as US supply is seen expanding the glut," said Michael van Dulken at Accendo Markets.
A strengthening US currency also helped depress demand for dollar-priced oil, which becomes more expensive for holders of weaker units.
"The (recent) decline is not very surprising because oil fundamentals still remain weak," added Daniel Ang, an analyst with Phillip Futures in Singapore.
"We're looking at strong oversupply and not-so-outstanding demand," he said. "It is going to be very difficult to maintain higher prices."
The dollar climbed ahead of the outcome of the US Federal Reserve's latest monetary policy meeting, which wraps up on Wednesday.
Dealers said investors are looking for an insight into the Fed's thinking, just six weeks after announcing the first US interest rate hike since 2006.
The market is also anticipating the return of Iranian oil exports, which would further add to the oversupply.
A day after Western economic sanctions were lifted last week, Iran announced a major boost in crude production, with the National Iranian Oil Company saying it had ordered output to increase by 500,000 barrels per day.