Oil prices plunge in Asian trade

SINGAPORE – Oil prices dipped in Asian trade Friday, October 11, despite hopes of a breakthrough in the crippling budget impasse in Washington, as dealers focused on a US supply glut, analysts said.

Read: Congress ‘playing with fire’ on debt ceiling, Lew says

New York’s main contract, West Texas Intermediate (WTI) for delivery in November, was down 28 cents at $102.73 in mid-morning trade, while Brent North Sea crude for November eased 27 cents to $111.53.

Asian equity markets rallied Friday in response to a Republican proposal to offer a 6-week extension of US borrowing authority, with less than a week before the government runs out of cash to pay its bills.

The White House said President Barack Obama would be open to a short-term debt ceiling hike.

But analysts said oil markets were under pressure owing to worries about supply in the United States.

“The recent EIA (Energy Information Administration) weekly report showed high WTI crude stockpiles at the Cushing trading hub,” Teoh Say Hwa, head of investment at Phillip Futures in Singapore, told AFP.

The latest US data released Wednesday showed a surprising build-up of 6.8 million barrels.

Teoh said the glut at Cushing, Oklahoma — the delivery point for WTI futures — was likely caused by a fall in utilization levels as US refineries undergo maintenance from September to October.

Teoh added that prices were also weighed by a strengthening US dollar, which fetched 98.47 yen in the morning, up from 97.91 yen in New York late Tuesday.

A stronger greenback makes dollar-priced oil more expensive for buyers using weaker currencies, denting demand. – Rappler.com