Oil steady; U.S. Crude Holds Below $50 as Stockpiles Rise

U.S. crude for September delivery was 3 cents higher at $49.22 by 0651 GMT, after dropping $1.67 to settle below $50 for the first time since April.

Published: 23rd July 2015 12:57 PM  |   Last Updated: 23rd July 2015 12:58 PM   |  A+A-

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A flame shoots out of a chimney at a petro-industrial factory in Kawasaki near Tokyo December 18, 2014. | Reuters

SINGAPORE: Oil prices held steady on Thursday, with U.S. crude trading below $50 a barrel near its lowest in more than three months as rising U.S. stockpiles and a strong dollar weighed on the commodity.

Crude oil stocks in the United States rose 2.5 million barrels last week to above the five-year seasonal average, data from the Energy Information Administration (EIA) showed, contrasting with expectations of a 2.3 million-barrel drawdown.

"Demand is reasonably buoyant in the United States, but there's just so much supply," said Ben Le Brun, market analyst at OptionsXpress in Sydney.

"It's going to need a significant pickup in economic activity to meet the current oversupply," he said.

Crude stocks at the Cushing, Oklahoma, delivery point for the U.S. crude contract, also rose, the EIA said.

U.S. crude for September delivery was 3 cents higher at $49.22 by 0651 GMT, after dropping $1.67 on Wednesday to settle below $50 for the first time since April.

Brent crude was trading 13 cents lower at $56 a barrel, after settling down 91 cents.

Brent has shed about 12 percent this month on concerns about demand and the possibility that Iran's nuclear deal with six global powers could lead to higher supply from the OPEC member as sanctions against Tehran are lifted.

Still, OPEC delegates from Gulf states and other nations say the drop in prices is likely to be short term and will not deflect the cartel from its policy of keeping output high to defend market share.

The dollar eased but held near a three-month high, making oil and other dollar-denominated commodities expensive for holders of other currencies.

"Fundamentally there's not a lot to change the picture dramatically in the short term. Prices seem to be contained in a range for now," said Le Brun.

Brent's premium to the U.S. benchmark stood at $6.8 a barrel, widening more than $3 this month.

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