Oil prices edge up in Asian trade extending earlier gains

Oil prices rose in Asia Monday, extending last week’s gains but the persistent global supply glut will likely cap advances, analysts said.

U.S. benchmark West Texas Intermediate added 31 cents to $51.95 while Brent was up 24 cents at $58.11 in late-morning trade.

“There has been a continuation in the rise of oil prices from Friday’s session, but the market has started this week cautiously due to the ongoing oversupply situation,” said Michael McCarthy, chief market strategist with CMC Markets in Sydney.

Both contracts closed last week up more than five percent thanks to a drop in the number of U.S. oil rigs in operation, better economic data from Germany and easing expectations that Iranian oil would return to the market soon after a deal with Western powers over its nuclear program.

But Sanjeev Gupta, who heads the Asia-Pacific oil and gas practice at professional services firm EY, said: “Increases in crude oil inventory in the U.S. and the announcement of record output of crude by Saudi Arabia in March helped to limit gains in benchmark prices.”

U.S. inventories in the week to April 3 surged nearly 11 million barrels to a fresh record high of 482.4 million, according to the US Department of Energy, while in Saudi Arabia, Oil Minister Ali al-Naimi said output hit a record 10.3 million barrels a day in March.

Crude lost about 60 percent of its value to about $40 between June and late January owing largely to an oversupply in world markets.