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Oil rebounds in Asia but prices expected to remain soft

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oilSingapore, Oct 9 (AFP) Oil prices bounced from multi- month lows in Asia today, lifted by an equities rally and a weaker dollar as minutes from the US Federal Reserve’s latest policy meeting indicate it may keep interest rates at record lows longer then expected.

US benchmark West Texas Intermediate (WTI) for November delivery was up 18 cents at USD 87.49 a barrel after hitting an 18-month low in New York yesterday.

Brent crude for November advanced eight cents to USD 91.46 after tumbling to a two-year low the day before.

Minutes of the US central bank’s Federal Open Market Committee meeting showed members were wary about the timing of raising interest rates from their record lows.

“The cautious outlook on the economy and inflation has toned down expectations for the Fed to tighten,” said Desmond Chua, market analyst at CMC Markets in Singapore.

“Concerns over a strong dollar have also pared recent gains against the yen and the euro.”

Signs that the low interest rate regime would not end too soon lifted overall market sentiment, with the weaker dollar also helping boost oil prices.

A softer greenback makes dollar-priced oil cheaper for holders of other currencies, leading to higher demand.

“All in all, it is clear that the Fed is erring on the side of caution,” Singapore’s United Overseas Bank said in a note.

But some analysts said prices will likely be dragged by weaker demand owing to a stuttering global economy and a crude market awash with supplies.

The International Monetary Fund Tuesday cut its projection for world economic growth this year and next and warned of stagnation in developed economies.

“Crude prices are likely to remain soft in the near term,” said Sanjeev Gupta, who heads the Asia-Pacific Oil & Gas practice at professional services organisation EY. (AFP)

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