Oil fell on Wednesday on fresh evidence of growing global oversupply, and as investors awaited the outcome of a U.S. Federal Reserve meeting at which interest rates are likely to be raised, boosting the dollar and pressuring commodities.
Brent was down $1.14 at $37.31 a barrel at 1543 GMT. On Tuesday, the contract closed up 53 cents in its first gain in eight days.
Analysts are watching for any test of Brent’s December 2008 low of $36.20, with a break below that level taking the benchmark to levels not seen since 2004.
West Texas Intermediate crude futures were down $1.27 at $36.08 per barrel, after rising more than $1 on Tuesday. WTI was supported by looming changes to legislation that are expected to enable exports of U.S. crude oil.
The overwhelmingly bearish sentiment that has pushed Brent from above $115 per barrel in June last year returned to the fore as fresh evidence emerged that low prices are doing nothing to ease heavy oversupply.
Reinforcing a picture of a heavily over-supplied market, data from the U.S. Energy Information Administration showed crude inventories rising by 4.8 million barrels in the last week, compared with analysts’ expectations for an decrease of 1.4 million barrels.
“Only the staunchest contrarian could derive anything bullish out of that report,” said Peter Donovan, broker at Liquidity Energy in New York.