Oil prices rise in Asia markets following US drilling cut
Oil prices have surged in Asian markets, extending gains from the previous day after US oil companies cut drilling activity in response to low prices.
On Tuesday, US benchmark West Texas Intermediate (WTI) for March delivery was up 37 cents at USD 49.94, while Brent crude for March rose 22 cents to USD 54.97 a barrel in late morning trade.
The WTI had hit USD 50 a barrel on Monday before closing at USD 49.57. The cost of a barrel of Brent crude also topped USD 55 but ended at USD 54.75.
Analysts estimate that the sharp decline in US drilling activity will result in supply cuts. They, however, doubt that the oil prices rebound will be sustained as supplies still far outweigh demand.
US oil companies have cut drilling activity in response to low prices. Chevron Corporation, ConocoPhillips and other major energy corporations said that they will cut capital budgets in 2015 considering the lower oil prices.
Oil prices have plunged about 60 percent since June last year.
The steep falls in prices are caused by slowing global economic growth and an oversupply of the energy resource.
AR/HJL/HMV
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