Oil prices recover in Asian trading but remain near 5-year lows

A trader works on the floor of the New York Stock Exchange on Dec 1, 2014. -- PHOTO: REUTERS
A trader works on the floor of the New York Stock Exchange on Dec 1, 2014. -- PHOTO: REUTERS

SINGAPORE (AFP) - Oil prices bounced back in Asia on Monday on hopes of upbeat global manufacturing data to be released later this week, but remained near five-year lows after plunging more than 50 per cent since June.

US benchmark West Texas Intermediate rose 49 cents to US$58.30 while Brent gained 68 cents to US$62.53 in afternoon trade, reversing losses in both contracts in early trading.

"With preliminary manufacturing purchasing managers' index (PMI) data scheduled for release this week, it may give some support to falling oil prices," said Daniel Ang, investment analyst at Phillip Futures in Singapore.

"Expectations for this month's PMI are favourable, which should prevent a further drop for the week," he said.

"A large portion of crude oil is consumed for industrial usage, therefore making manufacturing PMI a gauge for crude oil demand," he added.

Survey company Markit's preliminary December manufacturing PMI data for the eurozone and the United States will be released Tuesday. HSBC will also release a similar survey for China's manufacturing sector on Tuesday.

The uptick in oil prices Monday follows heavy losses on Friday after the Paris-based International Energy Agency (IEA) slashed its 2015 demand outlook, despite plunging prices which would normally lead to increased consumption.

Demand is set to grow by 0.9 million barrels a day to reach 93.3 million barrels, some 230,000 barrels less than the previous forecast, the IEA energy watchdog said in a report.

The report triggered WTI to fall US$2.14 to settle at US$57.81 in New York, its lowest closing point since May 2009. Brent for January, which expires Tuesday, fell US$1.83 to US$61.85 in London, its lowest close since July 2009.

French bank Credit Agricole said a two-day meeting of the US Federal Reserve starting Tuesday would next be in focus, amid market wariness about the central bank's timing of interest rates rises next year.