3 Min Read
NEW YORK (Reuters) - Oil prices seesawed on Thursday in line with volatile U.S. equities, rising early as market bulls supported prices for a second day, then retreating, with global benchmark Brent falling into negative territory.
Despite data on Wednesday showing a huge build in U.S. crude inventories, oil rallied early in New York trade as investors regained their appetite for risk due to a respite in bad news out of China and the potential for more European monetary easing.
But oil prices came sharply off session highs by afternoon as stocks on Wall Street pared their early advance. Brent gave back all its gains and turned lower.
"Early strength and now a late fade," Donald Morton, an oil trader with Fairfield, Connecticut-based Herbert J. Sims & Co., said, describing the action.
Brent's front-month contract LCOc1, was down 20 cents at $50.30 a barrel by 1:42 p.m. EDT. Earlier in the session, it had risen more than $2.
U.S. crude's front-month CLc1 was up 15 cents at $46.40, versus its session high above $48.
Wall Street's early rally faded in afternoon trading on caution ahead of a U.S. jobs report that will probably influence the Federal Reserve's position on a potential interest-rate hike.
Adding to early support for oil was the European Central Bank's pledge to keep monetary policy loose and to act promptly when needed, after weak inflation and growth forecasts.
In China, markets closed for public holidays for the rest of the week, helping stabilize volatile oil prices.
Over the past two weeks, U.S. crude has see-sawed. Oil plunged to a 6-1/2-year low of $37.75 early last week, then climbed almost 28 percent over three trading sessions into Monday. It has since retraced much of that three-day gain.
Brent has also been erratic, gaining 28 percent over the last week in August to a one-month high above $54 before dipping back under $48 on Wednesday.
Data from the U.S. Energy Information Administration on Wednesday showed U.S. crude stocks rose by 4.7 million barrels in the week to Aug. 28 to 455.4 million, the biggest one-week rise since April.
Harry Tchilinguirian, head of global commodity strategy at BNP Paribas, said Friday's weekly data on the U.S. oil rig count[RIG/U] would be pivotal to direction.
The rig count has risen for six consecutive weeks so far. Any drop will alleviate oil's weak outlook.
Additional reporting by Libby George in London and Keith Wallis; in Singapore; editing by Susan Fenton, Andrew Hay and David Gregorio