Oil prices fell in Asia on profit-taking Friday following two days of gains, but analysts suggested there could be some extra gains after recently falling below $40 a barrel.
The losses come despite a rally across regional stock markets after the Bank of England announced an interest rate cut – the first since 2009 – and surprise stimulus to shore up the economy following Britain’s vote to leave the EU.
At about 0720 GMT, US benchmark West Texas Intermediate was down 29 cents, or 0.69 per cent, at $41.64 and Brent was 33 cents, or 0.75 per cent, down at $43.96.
The commodity rose around six per cent over Wednesday and Thursday after an energy report showing US gasoline stockpiles had slipped last week.
However, the gains came after both contracts had fallen into a bear market, having lost 20 per cent from recent highs above the $50 seen in early June.
Prices dropped below $40 a barrel on Monday, the first time since April.
“We’ve had a strong turnaround at a key level near $40 a barrel and that means the risks for crude in the short-term appear to be to the upside,” Michael McCarthy, a chief strategist at CMC Markets in Sydney said.
“It now looks like a potential return to a point between $44 and $45 is the most likely outcome.”
CMC Markets senior sales trader Alex Wijaya said that “other than the $40 technical floor to oil, the dip in prices could also be due to profit-taking from short-selling after Wednesday’s (stockpiles) data pushed prices up”.
“Taking all this into consideration, the market is now trying to find a fair value spot, a rebalance,” Wijaya said.
“Going forward, all eyes will be on demand in China and Asia.”
Investors will be watching the release later Friday of US July jobs data, which will give a fresh look at the world’s top economy and oil consumer.