Brent crude for January delivery increased 53 cents to close at $38.45 a barrel on the London ICE Futures Exchange. Official inventory data is due today from the US Energy Information Administration.
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West Texas Intermediate for January delivery, the front-month contract, was down 5 cents at $35.47 a barrel after finishing almost 5 percent lower on Wednesday.
The cartel’s output is accounted for around 40 percent of the global crude output.
Analysts said there was some price support after USA lawmakers’ agreement to pass a bill lifting a four-decade ban on oil exports as part of a massive government spending overhaul.
European benchmark Brent crude for February, a new contract, was down 15 cents at US$37.24. “We’re just not seeing the normal production cuts we’d expect given the plummet in prices”.
In a further sign of oversupply in the market, data released last night by the industry group, American Petroleum Institute, showed a surprise build of 2.3 million barrels in USA crude stockpiles last week. The decrease in crude oil stocks that is often seen at year’s end for tax reasons will likewise fail to materialize this year, Commerzbank added.
“The major driver this week has been US dollar strength against a backdrop of ongoing refusal to respond rationally to the current market surplus on the supply side”, Michael McCarthy, a chief markets strategist at CMC Markets in Sydney. As oil is priced in dollars, it becomes more expensive for holders of other currencies as the greenback appreciates.
Futures held losses in NY after closing Thursday at the lowest in nearly seven years, and were down 2.3 percent this week.
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Reuters reported that India’s fuel demand rose 6.4% in November when compared with the same month past year, driven by higher sales of gasoline as discounts and festive season buying boosted passenger vehicle sales.
