Oil falls back on record-high US supplies

[LONDON] World oil prices hit reverse gear on Thursday, wiping out earlier gains, as traders switched their attention back to record-high US stockpiles, dealers said.

US benchmark West Texas Intermediate (WTI) for April delivery fell 61 cents to US$47.56 per barrel.

In late afternoon London deals, European benchmark Brent North Sea crude for April retreated 51 cents to US$57.03 a barrel.

"Oil prices have resumed their downward trend," said Fawad Razaqzada, analyst at trading site Forex.com.

"The relentless growth in crude inventories is continuing to exert strong pressure and not even a weaker dollar is able to support oil prices," he told AFP.

Prices had risen in earlier Thursday deals on the back of the weak dollar and unrest in oil producer Iraq, where thousands of Iraqi troops and militiamen have laid siege to jihadist fighters.

Crude futures finished mixed Wednesday after a key report showed US crude stockpiles had struck another record high, adding to an oversupplied global market.

The US Department of Energy reported that crude oil inventories surged by 4.5 million barrels in the week to March 6 to 448.9 million.

That was the highest level since the beginning of the weekly data series in 1982.

The oil market had also risen earlier Thursday on the weaker dollar.

In foreign exchange activity, the European single currency sank as low as US$1.0495 on Thursday, touching the lowest level in more than 12 years.

The weaker greenback makes dollar-denominated oil cheaper for buyers using stronger currencies, which tends to stimulate demand and crude prices.

The euro, which has shed about 13 per cent of its value this year, has been losing further ground in recent days as the European Central Bank has embarked on a policy of so-called quantitative easing.

The oil market collapsed by about 60 per cent between June and late January due to oversupply in world markets, a weak global economy and the strong dollar.

Prices have since rebounded somewhat following a slowdown in US oil-drilling activities, but analysts say volatility is likely to continue for some time.

Investors were also monitoring the progress of talks between the United States and other major Western powers and Iran on Tehran's contested nuclear programme as a deadline at the end of March nears.

The Islamic republic has been crippled by a series of UN and US sanctions, including on crude exports, aimed at bringing an end to its nuclear drive, which the West says is being used to develop atomic weapons. Iran denies the allegations.

AFP