Thursday, 12 March 2015 20:33
LONDON: Crude oil futures diverged on Thursday with Brent rising towards$ 58 a barrel on Thursday as the dollar weakened, while U.S crude futures fell below $ 48 a barrel after industry monitors estimated another big stock build at the Cushing, Oklahoma, delivery point for US crude.
The dollar fell after US retail sales unexpectedly dropped for a third straight month in February as harsh weather likely dampened consumer spending.
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The dollar was down 0.43 percent against a basket of currencies, making dollar-traded commodities such as crude oil more attractive to holders of other currencies.
“A slightly weaker dollar is helping crude prices today,” Michael Hewson, chief markets analyst at CMC Markets, said. “We’ve still got a significant supply glut.
Overall I think the buyers are starting to shift a little bit lower.” Brent for April delivery was up 38 cents at $ 57.92 at 1413 GMT, after gaining $ 1.15 during the previous session in a rebound from a one-month low.
West Texas Intermediate reversed early gains to trade down 40 cents at $ 47.77 a barrel, after industry monitoring group Genscape said that stocks at Cushing, Oklahoma rose by 2.2 million barrels since March 6, said traders.
WTI prices also came under pressure after the Houston Ship Channel, a key conduit for US crude imports, was fully reopened Thursday morning.
The April contracts for Brent and WTI expire next week.
“When contracts expire there is more uncertainty and volatility associated with oil.
For investors speculating, directionally WTI seems to be facing more pressure heading down. Brent will move upwards,” Victor Shum, vice president of IHS Energy in Singapore, said. Brent’s premium to US crude widened to over $ 10 a barrel, after dropping below $ 8 on Tuesday, its narrowest in a month.
Bearish sentiment towards WTI caused by a build in US crude stocks helped to widen the spread, limiting the gains in WTI, Yusuke Seta, a commodity sales manager at Tokyo’s Newedge Japan, said. US crude inventories rose for the ninth straight week, gaining 4.5 million barrels last week to 448.9 million, US Department of Energy data showed on Wednesday.
That was the highest level at this time of year in more than 80 years.
Oil stocks are forecast to rise further due to refinery maintenance, and the dollar could continue its recent strengthening against the euro, analysts said.
“There are still no signs that US crude oil production might be waning – output grew last week to just shy of 9.4 million barrels per day, putting it at its highest level in 42 years,” analysts at Germany’s Commerzbank said in a note.
Copyright Reuters, 2015
