Oil prices held steady after surrendering early gains on Thursday, as an unexpectedly large rise in U.S. inventory levels dented some of the recent optimism that the oversupply plaguing the market could soon vanish.
U.S. crude stocks rose by 3.1 million barrels to 461 million last week as refineries cut output and idled capacity. Analysts had expected a rise of 2.2 million barrels.
The oil price is set for a 7 percent gain this week, its largest weekly increase since late August, after oil industry executives warned that this year’s fall below $50 would force higher-cost producers to reduce output.
“Those expectations drove prices upwards, so that’s being reassessed and it’s possible we’ll see prices dropping below $50 again,” Commerzbank analyst Carsten Fritsch said.
Brent crude oil futures rose 6 cents on the day to $51.39 a barrel by 1058 GMT, down from an intraday high of $52.03 and down from Wednesday’s one-month high at $53.15. U.S. crude futures rose 11 cents to $47.92 a barrel.
Underpinning the crude complex was a drop in the dollar ahead of the release of the minutes of the Federal Reserve’s most recent policy meeting, which may offer some insight into the outlook for interest rates.
A weaker dollar tends to make it cheaper for non-U.S. investors to buy dollar-denominated assets.