Oil prices slipped on Thursday, as support from a weaker dollar was offset by US crude inventories near record high levels that again raised concerns whether the Organisation of the Petroleum Exporting Countries (Opec)-led output cuts were starting to drain a global glut.
The Opec and some non-OPEC producers cut production from January 1 to reduce record stocks of crude. But an oil price rally after the deal has been hobbled by data showing persistently rising US stockpiles.
Latest data from market intelligence firm Genscape showed a build of more than 2 million barrels in the week to March 14 at the Cushing, Oklahoma delivery point for US crude futures, traders said.
Data on Wednesday showing a modest slide in crude stockpiles in the United States, the world's biggest oil consumer, had helped lift oil prices after a week-long rout spurred by record US inventories pushed them to three-month lows.
The US Energy Information Administration said on Wednesday that crude inventories fell last week, the first decline after nine weeks of increases, but only by a dip of 237,000 barrels from a record high. It also reported Cushing stocks jumped 2.1 million barrels in the week to March 10.
Brent crude
US light crude
Prices also got a brief lift after Bloomberg reported Saudi Energy Minister Khalid Al-Falih as saying the cuts could be extended if inventories remain above average.
"Market focus remains centred on escalating US production growth and elevated domestic inventory levels, but this is not representative of the rest of the world. Inventories are drawing in several other key regions," RBC Capital Markets analysts said in a note.
"Despite the broad-based headlines of a holistic global oil surplus, we contend that certain markets such as Asia remain in a deficit, while regions like the Atlantic Basin and the US remain in surplus."
Some support came from the US Federal Reserve on Wednesday after it signalled it would not accelerate plans to raise interest rates, depressing the dollar against a basket of currencies and lifting the greenback-denominated oil price.
"I don't think that's going to be a massive influence at this point in time and the main reason being that it is a small move and the risk trade is still on at this point," said Mark Watkins, regional investment strategist at the Private Client Group at US Bank in Park City, Utah.
"Unless there is a global disruption where money needs to move to a safe haven, the interest rate movement isn't going to have a long term material impact at this point in time."