Oil prices turned lower on Monday after a firm start, with an oversupply continuing to weigh on the market despite data showing Japan had pulled out of recession. Prices initially rose in early Asian trade but then dipped as the return to growth in Japan in the October-December quarter was weaker than expected, while a drop in the number of rigs drilling in the United States did not change the view that oil markets remained oversupplied.
In Japan, household and corporate spending disappointed, underlining the challenge premier Shinzo Abe faces in shaking off decades of stagnation. Benchmark Brent crude futures were trading at $61.29 per barrel at 0245 GMT (9.45 p.m. EST Sunday), down 23 cents since their last settlement. U.S. WTI crude was down 20 cents at $52.58 a barrel.
The dip was also a reaction to strong gains made last week when oil markets rose strongly after another drop in the U.S. rig count, pushing Brent back above $60 a barrel for the first time since December. Despite the price rises of the past two weeks, analysts say significant oversupply remains in oil markets as output stays high while demand is relatively low.