Oil down second day running on fresh supply build, dollar spike

Thu Dec 17, 2015 2:59pm EST
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By Barani Krishnan

NEW YORK (Reuters) - Oil prices fell as much as 2 percent on Thursday, with Brent trading near 11-year lows, as data showing fresh supply builds at the delivery point for U.S. crude futures added to worries about a global glut.

Market intelligence firm Genscape reported an inventory increase of 1.4 million barrels at the Cushing, Oklahoma delivery hub for the U.S. crude's West Texas Intermediate (WTI) futures, traders who saw the data said.

"Bearish fundamentals are hanging over the oil markets like storm clouds, with no break in sight or relief in the near future," said Chris Jarvis, founder of Caprock Risk Management, an oil market consultancy in Frederick, Maryland. "The dollar is moving higher too."

The dollar hit a two-week high against a basket of currencies, making oil and other commodities denominated in the greenback less affordable to users of the euro among others. [USD/]

WTI was down 72 cents, or 2 percent, at $34.80 a barrel by 1:40 p.m. EST (1840 GMT), reaching a session low of $34.63. On Monday, WTI hit a seven-year low of $34.53.

Brent, the global crude benchmark, was down 30 cents at $37.09 a barrel, trading less than $1 above its 2004 low.

WTI and Brent fell about 3 percent on Wednesday after government data showed a ramp up in oil supplies across the United States last week. A Federal Reserve interest rate hike, which should support the dollar, added to bearish sentiment in oil. [EIA/S]

Speculation about an imminent end to a 40-year ban on U.S. crude exports has caused Brent's premium to WTI to dwindle to $1 per barrel or less. The premium was above $13 a barrel in March.   Continued...

A gas pump is seen hanging from the ceiling at a petrol station in Seoul June 27, 2011. REUTERS/Jo Yong-Hak