Crude Oil Stuck Near $35 On Massive US Inventories

U.S. crude supplies of last week gained 4.8 million barrels to 490.7 million barrels, 110.7 million barrels more than one year ago, according to the weekly report issued by the U.S. Energy Information Agency (EIA) Wednesday.

Brent crude oil futures settled over percent lower at $37.19 a barrel after hitting $37.11 a barrel, near an 11-year-low.

Light, sweet crude for January delivery recently lost 87 cents, or 2.5%, to $34.65 a barrel on the New York Mercantile Exchange. The markets reacted accordingly with mostly strong performances all around.

Oil inventories usually decline this time of year as refineries ramp up their processing rate to produce heating oil.

Oil prices extended losses in Asia Thursday after rising USA stockpiles reinforced fears of a prolonged global glut, while the US dollar strengthened after the Federal Reserve hiked interest rates.

Oil is trading near levels last seen during the global financial crisis on signs a record surplus will worsen.

“The major driver this week has been US dollar strength against a backdrop of ongoing refusal to respond rationally to the current market surplus on the supply side”, Michael McCarthy, a chief markets strategist at CMC Markets in Sydney.

Higher US rates typically support the dollar, making oil and other commodities denominated in the greenback more expensive, undermining demand. The oil-export measure is at the center of a deal congressional leaders announced early Wednesday on spending and tax legislation. Yet perhaps that is not as much of an issue for them as oil prices are nearly $20.00 a barrel cheaper than they were previous year.

Crude exports were banned in 1975 as prices skyrocketed in the wake of the Arab oil embargo.

Gasoline stocks rose by 1.7 million barrels, compared with analysts’ expectations in a Reuters poll for a 2 million barrels gain.

Georgi Kantchev and Jenny W. Hsu contributed to this article.