Crude Oil Stuck Near USD35 On Massive US Inventories

United States crude stocks increased last week as imports into the Gulf Coast rose, data from the Energy Information Administration (EIA) showed on Wednesday, surprising analysts who expected inventories to decline.

The steep fall has pushed oil to its lowest point since the financial crisis.

Brent contracts for February delivery cooled 1.7% since yesterdays close settling at $37.06 per barrel.

Oil slipped towards an 11-year low on Thursday, dented further by a seemingly relentless build in oversupply, and as the dollar strengthened after the U.S. Federal Reserve raised interest rates for the first time in almost a decade.

“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”, said Michael McCarthy, a chief markets strategist at CMC Markets in Sydney.

Higher U.S. rates typically support the dollar, making dollar-priced oil more costly for holders of other currencies and undermining demand.

Total crude inventories rose by 4.8 million barrels in the latest week, compared with analysts’ expectations for an decrease of 1.4 million barrels.

The decision by the U.S. Congress to repeal the 40-year old ban on crude exports also sent jitters across the market. The oil-export measure is at the centre of a deal congressional leaders announced early Wednesday on spending and tax legislation. The American Petroleum Institute on Tuesday reported a 2.three million-barrel improve, in line with sources, however analysts polled by Platts anticipated provides to be down by 2.5 million barrels. In November, OPEC production rose by 230,000 barrels per day from the previous month to average 31.70 million barrels per day, according to OPEC monthly oil market report released on Thursday.

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