SINGAPORE: Crude oil prices recovered on Thursday after a two-day slide, although high U.S. stocks and strong global production, along with a firm dollar, were keeping markets under pressure.
The resurgent dollar had weighed on the market earlier in the week, plus concerns that U.S. crude supplies may have started rising again.
Industry group American Petroleum Institute (API) said after the market’s settlement that U.S. crude inventories rose by 1.3 million barrels last week, following three weeks of straight withdrawals.
The U.S. dollar index .DXY ticked lower but remained near one-month highs.
Front-month Brent futures LCOc1 climbed 56 cents to $62.62 a barrel by 0627 GMT on Thursday. U.S. crude futures CLc1 were up 36 cents from their last settlement at $57.88 per barrel.
Brent’s premium over West Texas Intermediate (WTI) CL-LCO1=R has come off more than 45 percent since mid-April, with record OPEC production weighing on Brent.
“The market is trying to anticipate what’s going to happen tonight,” Phillips Futures analyst Daniel Ang in Singapore said, referring to the release of weekly oil inventories data by the Energy Information Administration later on Thursday.
“We’re seeing a narrowing of the WTI-Brent spread, which would suggest that U.S. crude inventories are expected to have dropped,” he said.
Analysts said in a Reuters poll on Wednesday that crude stocks in the United States probably fell by 900,000 barrels last week, dropping for a fourth straight week. [EIA/S]
The American benchmark, meanwhile, received some support from the peak-demand summer driving season, almost a month of steady stock draws that only came to an end this week, and raging Canadian wildfires that forced the evacuation of several oil and gas sands production sites.
Technical market indicators implied that the WTI-Brent spread could narrow further as U.S. oil could rebound into a range of $58.14-$58.41 per barrel while Brent was expected to drop to $61.50 per barrel, according to Reuters technical analyst Wang Tao.
Still, OPEC said the North American oil boom was proving resilient despite low prices, suggesting the global oil glut could persist for another two years.