Oil ends up, recovering from lows; glut remains a worry
By Barani Krishnan
NEW YORK (Reuters) - Oil fell to near three-month lows and U.S. crude futures slipped to below $40 a barrel before settling higher on Wednesday as short-covering lifted a market initially suppressed by worries about a global supply glut.
U.S. crude inventories grew by 252,000 barrels last week, according to data from the Energy Information Administration (EIA) that came in below a 2 million-barrel build forecast by analysts in a Reuters poll.[EIA/S]
The smaller-than-expected stockpiles growth convinced some traders and investors to cover short positions in late trading, helping oil prices recover.
Crude futures tumbled earlier after the EIA data showed the eighth straight week in builds leaving inventories at 487.3 million barrels, within a hair of the April record of 490.9 million.
U.S. crude's West Texas Intermediate (WTI) futures CLc1 settled up 8 cents at $40.75 a barrel, after hitting a session low at $39.91. The last time WTI traded below $40 was on Aug. 27.
Brent LCOc1 settled up 57 cents, or 1.3 percent, at $44.14, helped by a relatively better outlook for the global crude benchmark versus WTI.
"To convince me today's action was more than short-covering, I'd need to see a close above $42 on WTI," said David Thompson of Powerhouse, a Washington-based energy-focused commodities broker.
Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland, saw weakness returning to crude prices in coming days. Continued...