The rally, partly driven by the 5 percent drop in the dollar this year, accelerated even tough USA government data showed on Wednesday that crude stockpiles swelled to all-time highs above 540 million barrels. Record crude storage figures may have spurred some investors to take profits on Thursday by closing long positions, traders said, and government data on Wednesday showed that US crude stocks climbed 2 million barrels last week to an all-time peak of 540.6 million barrels.
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“Maintenance in the UAE at fields.is scheduled to end in April, implying a rise from current production of 2.73-million barrels per day (bpd) to the previous 2.91-million bpd production rate in May”, Deutsche said. Futures of Brent and USA crude’s West Texas Intermediate (WTI) surged minutes before settlement, hitting new peaks for the year as the dollar sank to session lows.
However, US government data also showed that production dropped by 15,000 barrels per day (bpd) to 8.94 million bpd last week.
International Brent crude futures were trading at $46.91 per barrel at 0638 GMT, down 27 cents from their last settlement.
Despite Wednesday’s retreat, Brent is up 16 percent for April, heading for its largest monthly gain in a year.
“When prices go up and they resume, we’ll have to see whether demand can catch up with supply”, Wijaya said.
Moreover, the agency has estimated the glut to reduce to 200,000 barrels a day in the second half of the year, from an estimated 1.5 million barrels a day in the first half. That would support higher prices in the coming years, as investment in oil infrastructure catches up with demand.
On an underlying basis, the group also defied expectations for a loss, posting adjusted profits of 532 million United States dollars (£367 million), although this still marked a 79% plunge on the 2.58 billion U.S. dollar (£1.8) profits a year earlier.
“For now, the line of least price resistance remains to the upside, and we will be reassessing this view in light of tomorrow’s FOMC statement”, said Jim Ritterbusch of Chicago-based oil market consultancy Ritterbusch & Associates.
Weaker dollar and optimism on a global oil glut takes crude close to US$50 a barrel.
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Tyche Capital Advisors trader and portfolio manager Tariq Zahir said: “With crude inventories building and the Saudis still pumping at record levels, we feel the recent run-up has been mainly fuelled by the weakness on the dollar”.
