Oil prices closed higher Thursday after a volatile session that saw the New York price drop below $44 a barrel for the first time since March 2009.
While the market remained worried about the global glut of crude, the US benchmark futures contract, West Texas Intermediate (WTI) for March delivery, finished up eight cents to close at $44.53 a barrel, after falling as low as $43.58.
Brent North Sea crude for March, the key European contract, also swung sharply before settling at $49.13 a barrel in London, a gain of 66 cents from Wednesday’s closing level.
The sharp swings followed Wednesday’s stiff losses, which came on another surge in US crude stockpiles.
“Yesterday’s inventory reports continue to fuel fears, (with) excessive supplies on the market,” said Gene McGillian of Tradition Energy.
“We saw that huge growth in US inventories and new records in production levels.”
According to the Department of Energy, US crude-oil stockpiles last week surged to the highest level in weekly data tracked since 1982. US production, meanwhile, rose to the highest level since at least 1983.
Since the report, “there hasn’t been anything new that seems able to change the direction of the market,” McGillian said.
The slight rebound in prices Thursday was partly because market volatility encouraged speculators to snap up crude at lower prices, said James Williams of WTRG Economics.
“The only glimmer of hope in yesterday’s inventory report were the sharp falls in gasoline and distillate stocks on the back of robust demand. That said, this will hardly be sufficient to prevent crude oil stocks from swelling even further,” Commerzbank said in a market note.
Daniel Ang, investment analyst at Phillip Futures in Singapore, said the US stockpiles surge came as “no surprise” as refinery utilization rates in the world’s top crude consumer have been low.
However, “what is really shocking is that US production still continues to increase despite low crude prices,” Ang said. “Without a drop in US crude production, it is going to be an uphill battle for oil bulls,” he added.
Oil prices have fallen about 60 percent since June amid a supply glut, boosted largely by robust US shale-oil production, and weak global demand.