Oil prices subdued in Asia

Singapore: Oil prices remained weak in Asia on Tuesday on tepid economic data from Japan and indications that major crude exporter Saudi Arabia's 2016 budget is based on prices staying low. 

Prices tanked more than three percent on Monday, effectively dousing a rally that followed after Brent crude tumbled to 11-year lows last week. Volumes were thin as investors were in a holiday mood. 

At around 0330 GMT, US benchmark West Texas Intermediate for delivery in February was up one cent at USD 36.82 and Brent crude for February was trading two cents higher at USD 36.64. Both contracts were down earlier Tuesday. 

Daniel Ang, an investment analyst with Phillip Futures in Singapore, said the price weakness could have been sparked by data showing Japanese industrial production fell 1.0 percent in November from a month earlier. The data comes after separate figures last week showed persistently weak inflation and household spending. 

"We do not often see Japanese data impact oil prices this much. However, in the absence of major news such as those from the US, even the minor ones shake the market," Ang told AFP. 

Reports that key petroleum exporter Saudi Arabia will cut fuel and utility subsidies in response to a record budget deficit to cope with plunging oil prices also spooked the market. 

Bloomberg News said Saudi's 2016 budget is probably based on crude prices of about USD 29 a barrel. 

The kingdom and its Gulf partners, all key members of the influential Organization of the Petroleum Exporting Countries, had opposed calls by poorer OPEC members to slash the group's high production levels in order to ease a supply glut and reduce prices. 

The crude oversupply is expected to last into 2016, with no production cuts in sight and Iran poised to ramp up its exports within months once western economic sanctions are lifted as part of a deal to curb Tehran's nuclear ambitions, analysts said.