NEW YORK/LONDON Oil prices slid on Thursday, reversing early gains as a rebounding dollar weighed on commodities denominated in the U.S. currency.
Prices were already lower when market intelligence firm Genscape reported a build of more than 840,000 barrels in U.S. crude in the four days to April 19 at the Cushing, Oklahoma delivery point, traders who saw the data said.
The Genscape data further weighed on sentiment. Market players already were concerned that this month's 14 percent rally could coax U.S. shale crude producers to raise output.
Brent crude futures' front-month contract was down 55 cents, or 1.2 percent, at $45.25 a barrel by 11:24 a.m. EDT (1524 GMT), off its session high of $46.18. Brent had gained 7 percent in two previous sessions.
The front-month in U.S. crude's West Texas Intermediate (WTI) slid 48 cents to $43.70 a barrel, off its session high of $44.49.
Prices rose early, then retreated after the dollar index rebounded, making crude and other commodities denominated in the greenback more expensive to holders of currencies like the euro.
Despite Thursday's slide, Brent and WTI are up about 70 percent from multi-year lows hit between January and February. The rally came despite builds in U.S. crude inventory and failure by major oil producing countries to agree to an output freeze to fight the global supply glut.
"If you were to take the fundamental pieces of the puzzle, they really don't compare with the latest two days of pickup in prices," said Harry Tchilinguirian, global head of commodity strategy at BNP Paribas.
"Should we really be at $43 on a WTI basis because the closer we get to $45 mark with a curve that is in contango in the case of WTI, the more you’re going to throw a lifeline to US shale producers."
Oil rose in early trade after the International Energy Agency (IEA) said non-OPEC production would fall this year by the most in a generation.
IEA chief Fatih Birol said low oil prices had cut investment about 40 percent over the past two years, with sharp falls in the United States, Canada, Latin America and Russia.
But Russia's energy minister said the country might push oil production to historic highs, while Iran reiterated its intention to boost output to 4 million barrels per day, and Saudi Arabia threatened to flood markets with more crude.
Libya could also rapidly ramp up oil production, the head of Libya National Oil Corporation (NOC) told an oil summit in Paris.
(Reporting by Barani Krishnan in NEW YORK and Sarah McFarlane in LONDON)
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Published Date: Apr 22, 2016 01:45 AM | Updated Date: Apr 22, 2016 01:45 AM