Oil prices held steady in early Asian trade on Thursday, with U.S. crude trading below $50 a barrel near its lowest in more than three months as rising U.S. stockpiles and a strong dollar weighed on the commodity.
Crude oil stocks in the United States rose 2.5 million barrels last week to above the five-year seasonal average, data from the Energy Information Administration (EIA) showed, contrasting with expectations of a 2.3 million-barrel drawdown.
“Demand is reasonably buoyant in the United States, but there’s just so much supply,” said Ben Le Brun, market analyst at OptionsXpress in Sydney.
“It’s going to need a significant pickup in economic activity to meet the current oversupply,” he said.
Crude stocks at the Cushing, Oklahoma, delivery point for the U.S. crude contract, also rose, the EIA said. [EIA/S]
U.S. crude for September delivery was 11 cents higher at $49.30 by 0300 GMT (11 p.m. EDT on Wednesday), after dropping $1.67 on Wednesday to settle below $50 for the first time since April.
Brent crude was trading 2 cents lower at $56.11 a barrel, after settling down 91 cents.
Brent has shed about 12 percent this month on concerns about demand and the possibility that Iran’s nuclear deal with six global powers could lead to higher supply from the OPEC member as sanctions against Tehran are lifted.
Still, OPEC delegates from Gulf states and other nations say the drop in prices is likely to be short term and will not deflect the cartel from its policy of keeping output high to defend market share.
The dollar eased but held near a three-month high, making oil and other dollar-denominated commodities expensive for holders of other currencies.
“Fundamentally there’s not a lot to change the picture dramatically in the short term. Prices seem to be contained in a range for now,” said Le Brun.
Brent’s premium to the U.S. benchmark stood at $6.8 a barrel, widening more than $3 this month.