Crude oil prices slump in Asia as oversupply concerns dominate

Investing.com - Crude oil prices slid in Asia on Monday with continued concerns on oversupply globally and uncertain demand signals from key importers such as China and India.

On the New York Mercantile Exchange, crude oil for delivery in May slumped 1.28% at $45.98 a barrel by close of trade.

Last week, crude oil futures rallied on Friday, as a broadly weaker U.S. dollar lifted demand for dollar-denominated commodities.

The dollar tumbled after the Federal Reserve downgraded its forecasts for growth and inflation earlier in the week and lowered its interest rate projections, prompting investors to push back expectations on the timing and pace of future rate increases.

Dollar-denominated oil futures contracts tend to rise when the dollar falls, as this makes oil cheaper for buyers in other currencies.

U.S. oil received an additional boost after industry research group Baker Hughes (NYSE:BHI) said that the number of rigs drilling for oil in the U.S. fell by 41 last week to 825, the 15th-straight week of declines and the lowest since March 2011.

Market players have been paying close attention to the shrinking rig count in recent months for signs it will eventually reduce the glut of crude flowing into the market.

However, total U.S. crude oil inventories stood at 458.5 million barrels as of last week, the most in at least 80 years, indicating that cheap prices have yet to affect output.

Elsewhere, on the ICE Futures Exchange in London, Brent for May delivery tacked on 89 cents, or 1.64%, on Friday to settle the week at $55.32 a barrel by close of trade.

Oil prices have stabilized somewhat in recent weeks, following a seven-month rout which saw prices drop as much as 60% after OPEC resisted calls to cut output, while the U.S. pumped at the fastest pace in more than three decades, creating a glut in global supplies.

In the week ahead, investors will be focusing on Tuesday’s U.S. inflation report after Fed Chair Janet Yellen warned last week that the stronger dollar was pushing down consumer prices.

Oil traders will also continue to monitor developments surrounding talks between Iran and world powers over Tehran's nuclear program as well as fighting in Libya.

On Monday, the U.S. is to release a report on existing home sales.