Oil price rebound fizzles out in Asia

Oil turned lower in Asia Thursday as an early rally fizzled out after the euro was hit by fresh concerns over Greece, further hurting demand in the face of an oversupply, analysts said.

U.S. benchmark West Texas Intermediate (WTI) for March delivery was down 32 cents to $48.14 in afternoon trade and Brent crude for March tumbled 16 cents to 54.03. Both contracts started higher in early Asian trade.

Crude prices on Wednesday snapped a three-day rally, with WTI sinking 8.7 percent owing to mounting stockpiles.

Analysts said prices are weighed down by the euro’s fall on news that the European Central Bank had cut off Greek banks’ access to a key source of much-needed cash.

In a decision that rattled global financial markets, the ECB said Wednesday it would no longer allow Greek banks to use government debt, which has a junk rating, as collateral for loans.

“The Greek situation is worth keeping an eye on as it massively impacts the value of the euro against the US dollar,” said Shailaja Nair, associate editorial director at energy information provider Platts.

A sinking euro makes dollar-priced oil more expensive, denting demand and adding downward pressure on crude prices, which have already been battered by a supply glut and weak demand.

Crude has lost more than half its value since June, when prices were at more than $100 a barrel.

Global supplies have been boosted by surging U.S. shale oil production and a decision by the Organization of the Petroleum Exporting Countries in November to keep current output levels.

Greece’s Syriza Party won last month’s election on an anti-austerity platform, sparking fears the country will default on its debt obligations and exit the eurozone currency union.

Syriza wants to renegotiate the terms of Greece’s 240-billion-euro ($269 billion) bailout deal with the European Union and the International Monetary Fund which the party says is stifling any chance Greece has of economic recovery.