Oil down as supply offsets dollar, Brent-U.S. spread near week high

Thu Mar 12, 2015 4:14pm EDT
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By Barani Krishnan

NEW YORK (Reuters) - Global oil prices fell on Thursday on estimates showing another big supply build at the delivery point for the U.S. crude contract, with trade volatile ahead of the expiry of the front-month in benchmark Brent oil.

The reopening of the Houston Shipping Channel for oil imports and the possibility of higher total U.S. oil inventories stemming from a tentative deal to end a U.S. refinery strike added to the bearishness across the oil futures complex. Gasoline prices RBc1 closed down 1 percent while heating oil HOc1 fell 2 percent.

Marine traffic in the Houston channel had been partially halted after Monday's collision between a tanker and a bulk carrier, and reopened after the removal of liquid cargo from the ship’s breached tanks.

"The ship channel opening allows crude to get to refineries and the expectation is that with margins strong, refiners will produce as much as they can and this is putting some pressure on oil futures," said Phil Flynn, analyst at Price Futures Group in Chicago.

In the case of the strike, twelve refineries with a fifth of U.S. refining capacity were hit by work stoppage over the last 40 days, the largest such walkout in 35 years.

U.S. crude CLc1 settled down $1.12, or 2.3 percent, at $47.05 a barrel.

Brent LCOc1 closed down 46 cents, or nearly 1 percent, at $57.08.

Brent's premium to U.S. crude CL-LCO1=R, a favorite play in oil, widened by more than $1 to above $10 a barrel on Thursday, hitting a near one-week high.   Continued...

An oil well is seen near Denver, Colorado February 2, 2015.   REUTERS/Rick Wilking