Brent was up 15 cents at $37.21 a barrel. The global benchmark fell $1.34 to $37.39 the previous session.
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The Energy Information Administration (EIA) status report blindsided the market after reporting that Gulf Coast crude supply shot up over 8.0 million barrels.
On similar lines, crude for delivery in January next year was trading lower by Rs 14 or 0.56 per cent at Rs 2,474 per barrel in a business volume of 688 lots.
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Speculation about an imminent end to a 40-year ban on USA crude exports caused Brent’s premium to WTI to dwindle below $1 per barrel.
Oil prices, however, continued their descent, falling more than 3 percent on Wednesday and breaking a two-day rebound after reports by the US government showed a surprise weekly build in crude inventories and on the back of the Fed decision to raise interest rates for the first time in nine years.
While OPEC “could have done without” a return of USA crude, “probably much more impactful will be whatever comes out of Iran, starting sometime in the second quarter”, said David Fyfe, head of market research and analysis at trading house Gunvor Group Ltd. He also said the immediate effect of the ban’s repeal would be “relatively minor”.
Market intelligence company Genscape reported an inventory increase of 1.4 million barrels at the Cushing, Oklahoma delivery hub for WTI futures, traders who saw the data said on Thursday.
USA output has fallen since June as the crude-price collapse squeezes out high-cost drillers, indicating that OPEC’s year-old strategy to keep pumping to defend market share is starting to work.
“Despite the fiscal challenges that low oil prices create now, the alternative of cutting production reduces long-term revenues instead”, said the Goldman Sachs analysts. That helped drive ultra-low sulfur diesel futures (which includes heating oil) down 3.45 cents, or 3%, to $1.1122 a gallon, the lowest settlement since August 2004. A Federal Reserve interest rate hike, which should support the dollar, added to bearish sentiment in oil.
The dollar added around 1 percent against a basket of major currencies.
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Gene McGillian, broker and analyst at Tradition Energy, said oil prices will probably test the lows of 2008, which would bring WTI to the vicinity of United States dollars 32 a barrel.
