Oil snaps four-day losing streak after U.S. crude stockpiles drop

Wed Jan 7, 2015 4:17pm EST
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By Barani Krishnan and Samantha Sunne

NEW YORK (Reuters) - Oil closed up on Wednesday for the first time in five days as traders took stock of the market's rout after crude prices lost nearly 10 percent over two days and benchmark Brent fell to below $50 a barrel.

Weekly data for U.S. crude inventories showed a surprising drop last week, helping oil reverse early losses, although gasoline and distillates stocks jumped by record levels.

Oil prices were lower in early New York trade, extending their downdraft after the first negative reading in five years for euro zone inflation. They rebounded after the inventory data issued by the U.S. Energy Information Administration (EIA).

Brent's front-month contract LCOc1 settled at $51.15 a barrel, up 5 cents from Tuesday's close. It hit a session low of $49.66 in European trade, after euro zone consumer prices in December fell by more than expected.

U.S. crude CLc1 settled up 72 cents at $48.65, after rallying earlier to $49.31.

Brent's premium to U.S. crude CL-LCO1=R narrowed to $2.50, its lowest since mid-October.

Some traders said oil markets could be at a crossroads after losing over half their value from June highs, especially after the astounding 10 percent drop in the past two days.

Others thought Wednesday's price action was just a reprieve ahead of another leg lower.   Continued...

A flame shoots out of a chimney at a petro-industrial factory in Kawasaki near Tokyo in this December 18, 2014 file photo. REUTERS/Thomas Peter