Oil prices sustain rally

Buoyant oil prices sustained a rally in Asia Wednesday driven by hopes the crude supply glut would ease and expectations the US central bank would hold off from raising interest rates.

A softening of the US currency also helped bolster prices as the dollar-priced commodity becomes cheaper for holders of weaker units, spurring demand, analysts said.

US benchmark West Texas Intermediate (WTI) for November delivery rose 55 cents to $49.08 and Brent crude for November advanced 40 cents to $52.32 a barrel in late-morning trade.

Prices fell to six-year lows in August on strong production from the United States and the Organization of the Petroleum Exporting Countries, but have since crept higher.

The recent rally began last week after data showed a drop in US drilling activity, raising hopes this would help ease the oversupply.

The US Department of Energy has forecast production to decline to an average of 8.9 million barrels per day next year from 9.2 million in 2015.

Expectations that the Federal Reserve, the US central bank, would not raise interest rates this year because of the weak global economy also boosted oil prices, analysts said.

Bernard Aw, market strategist at IG Markets in Singapore, said an interest rate hike seemed less likely after the International Monetary Fund (IMF) on Tuesday downgraded its growth forecasts for the world economy.

The global economy will expand just 3.1 percent this year and 3.6 percent next year, the IMF predicted, revising downward its previous forecasts by 0.2 percentage points in both cases.

A rate increase will typically boost the dollar, making oil more expensive, hurting demand and prices.