United States oil price gains as traders buy dip

Higher rates in the United States support the currency and this makes oil as well as other commodities which trade in dollars more expensive which in turns undermines the demand. The nation’s crude inventories have swelled to 130 million barrels above the five-year seasonal average, EIA data showed.

In a further sign of oversupply in the market, data released late on Tuesday by the industry group, American Petroleum Institute, showed a surprise build of 2.3 million barrels in US crude stockpiles last week.

Futures held losses in NY after closing Thursday at the lowest in nearly seven years, and were down 2.3 percent this week.

“Only the staunchest contrarian could derive anything bullish out of that report”, said Peter Donovan, broker at Liquidity Energy in NY.

The West Texas Intermediate with a January delivery, went up by 17 cents to $ 35.69 per barrel at 0100 GMT.

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.

“This data is decidedly bearish as crude stocks now sit at record levels for this time of year and just off the all-time high of 490.9 million barrels”, said Chris Jarvis, president and senior analyst at Caprock Risk Management in Maryland.

The premium of Brent, the global benchmark, to WTI shrunk amid speculation the plan to allow domestic crude to be shipped overseas may help alleviate the USA supply glut. “The next several months we’ll probably see a sustained downward trend punctuated by short bursts of short covering”. Still, crude-storage tanks may reach their limit, pushing oil down to levels necessary to force an immediate halt to some production, the bank said.