Oil halts drop near US$45 after biggest two-day slide in three weeks

[MELBOURNE] Oil halted its slide near US$45 a barrel after the biggest two-day decline in three weeks amid rising US stockpiles.

Futures gained as much as 0.7 per cent in New York, trimming a weekly drop. Inventories expanded for a sixth week to keep supplies more than 100 million barrels above the five-year seasonal average, government data showed Wednesday. Saudi Arabia increased pricing for December sales of all its crude grades to Asia, where refiners are earning bigger profits.

Crude has slumped more than 40 per cent the past year amid speculation a global glut will persist as the Organisation of Petroleum Exporting Countries continues to pump above its collective quota. The dollar was steady after strengthening three days in a row as Federal Reserve Chair Janet Yellen said a US interest-rate increase remains a possibility for 2015.

"The market needs to see some sort of conventional supply- side response," said Michael McCarthy, a chief strategist at CMC Markets in Sydney who estimates WTI is trading in a range between US$43 and US$50 a barrel.

"If nothing changes, it's more likely that oil will drop out of the bottom of the range." West Texas Intermediate for December delivery rose as much as 33 cents to US$45.53 a barrel on the New York Mercantile Exchange and was at US$45.33 at 9.40am Hong Kong time.

Prices slid 5.6 per cent through the two days ended Thursday, the most since Oct 13. The volume of all futures traded was about 61 per cent below the 100-day average. WTI is down 2.6 per cent this week.

Brent for December settlement was 15 cents higher at US$48.13 a barrel on the London-based ICE Futures Europe exchange. Prices are down 2.8 per cent this week. The European benchmark crude was at a premium of US$2.76 to WTI.

BLOOMBERG