Brent crude rose towards $57 a barrel on Wednesday, paring some of the previous session’s sharp losses, after data showed US crude stocks fell for the first time in two months.
The benchmark closed nearly 4 per cent down in the previous session on a rallying US dollar and before an industry group said US crude inventories fell by 404,000 barrels last week. Analysts had expected a 4.4 million barrel build in stocks.
Brent for April delivery rose 27 cents to $56.66 a barrel by 0327 GMT after dropping $2.14, or 3.66 per cent, in the previous session.
West Texas Intermediate for April delivery climbed 56 cents to $48.85 a barrel after falling $1.71, or 3.42 per cent.
“The sell-off was overdone,’’ said Jonathan Barratt, chief investment officer at Sydney’s Ayer’s Alliance.
“I think it was more of a knee-jerk reaction because of the substantial build (of oil stocks) at Cushing,’’ he told Reuters.
US crude inventories
US crude inventories in the week to March 6 fell to 439.4 million barrels, while crude stocks at the Cushing, Oklahoma delivery hub rose by 2.2 million barrels, data from industry group, the American Petroleum Institute (API), had said on Tuesday.
The US Department of Energy’s Energy Information Administration will release the official stockpile data later on Wednesday. Analysts polled by Reuters expect a stock increase of 4.4 million barrels for the week ended March 6.
Dollar at multi-year highs
With the US dollar near to multi-year highs against a raft of currencies “oil has done very well to hold on. Brent is still trading through $55 a barrel’’, Barratt said.
A strong greenback makes commodities including more expensive for holders of other currencies.
Barratt said recent economic news had also been broadly encouraging and “if US crude doesn’t break below $48.50 again this is a great time to buy’’.
US job openings
The number of job openings in the US in January rose to the highest in 14 years, figures from the Labor Department had on Tuesday showed even as US sales recorded their biggest decline since 2009.
Data due on Wednesday, including industrial output and retail sales in February in China, the world’s top energy consumer, could give further direction.
The United States will also issue its Federal budget for February.
The oil markets have also priced in geopolitical risks, including Libya, where two eastern oil fields have been shut following an attack by Islamist militants, an oil official had said on Tuesday.