Oil retreats as rising U.S. inventories continue to weigh

Thu Feb 26, 2015 3:31pm EST
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By Robert Gibbons

NEW YORK (Reuters) - Crude oil futures fell sharply on Thursday as rising inventories in the United States pressured both Brent and U.S. contracts and countered expectations for recovering demand.

While Brent losses were tempered by those expectations for improving global demand and geopolitical concerns about energy supplies from Libya and Russia, U.S. crude losses more than wiped out Wednesday's gains.

Brent April crude LCOc1 fell $1.58, or 2.56 percent, to settle at $60.05 a barrel, off a $62.63 intraday peak. On Wednesday, Brent surged 5 percent.

U.S. April crude CLc1 fell $2.82, or 5.53 percent, to settle at $48.17, after rallying 3.47 percent on Wednesday.

Brent's premium to U.S. crude CL-LCO1=R on Thursday increased to $12.06, the widest spread since January 2014.

Both crude contracts rallied on Wednesday after Saudi oil minister Ali al-Naimi said demand was growing. Earlier in the week, a Gulf OPEC delegate predicted stronger demand growth in the second half of 2015.

Brent prices collapsed after hitting $115 in June 2014 on global oversupply and OPEC's subsequent decision to defend market share against rival producers rather than cut output.

Brent's recovery from a nearly six-year low of $45.19 in January was sparked by signs that lower prices are starting to reduce investment in production in non-OPEC countries.   Continued...

A pumpjack brings oil to the surface  in the Monterey Shale, California, April 29, 2013.  REUTERS/Lucy Nicholson