Brent crude rose to $57 a barrel on Wednesday, rebounding after hitting a one-month low as a surprise drop in U.S. oil stocks overshadowed a rally in the dollar and global oversupply.
Brent for April delivery LCOc1 hit a one-month low of $55.92 a barrel before recovering to trade up 62 cents at $57.01 a barrel by 1248 GMT(0848 DST). It dropped $2.14, or 3.66 percent, in the previous session.
West Texas Intermediate for April delivery CLc1 climbed 34 cents to $48.63 a barrel, after falling $1.71, or 3.42 percent, on Tuesday. Its discount to Brent was $8.38 a barrel, rising after hitting its narrowest point in a month on Tuesday.
Oil took some support from a surprise drop in crude stocks in the world’s largest oil consumer last week, with the American Petroleum Institute industry group reporting a 404,000-barrel fall late on Tuesday. Analysts had expected a 4.4 million-barrel build. [API/S]
Despite the draw, crude stocks rose by 2.2 million barrels at the Cushing, Oklahoma delivery point of the WTI contract, the API said, keeping price gains in check. Traders are now awaiting official data from the U.S. Energy Information Administration at 1430 GMT on Wednesday.
“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.
Putting pressure on prices, the dollar hit a new 12-year high against the euro on Wednesday, gaining more than 1 percent to trade at $1.0561 against the single currency.
The dollar index has rallied 25 percent since last May, making commodities priced in the greenback more expensive for holders of other currencies.
Russia’s crude oil exports are also set to rise this year, Energy Minister Alexander Novak said, despite some expectations of a plunge in production due to lower prices following the crash from above $100 a barrel last year.