December 10, 2014 / 1:14 AM / 4 years ago

Oil up after five-year low in Brent; traders wary of more downside

NEW YORK (Reuters) - Brent oil prices ended higher on Tuesday after touching a 5-year low and following five straight days of losses, while U.S. crude also rose as players looked for a sustainable price in a market haunted by oversupply concerns.

A customer holds a nozzle to fill up his tank in a gasoline station in Nice December 5, 2014. REUTERS/Eric Gaillard

Sentiment in oil was aided somewhat by a weaker dollar, which boosted the value of commodities denominated in the currency, traders said.

Lower capital expenditures for next year planned by oil companies such as ConocoPhillips also helped as they indicated less drilling and production.

But fear of a further slide after a 40 percent drop in Brent’s value since June kept market bulls away, analysts said.

New U.S. projections estimating a growth of more than 100,000 barrels per day in production by January from the big three U.S. shale plays also offset some of the positive impact from oil firms’ planned capital expenditure reductions.

Brent’s front-month futures contract settled up 65 cents, or 1 percent, at $66.84 a barrel. Earlier in the session, it fell to as low as $65.29, its weakest since September 2009. On Monday alone, Brent lost $2.88, or 4.2 percent, for its third-largest one-day loss this year.

U.S. crude futures finished up 77 cents at $63.82 a barrel, after swinging between a high of $64.20 and low of $62.25. It fell $2.79, or 4.2 percent, on Monday.

Both crude markets pared their gains in post-settlement trade after the American Petroleum Institute, an industry group, reported a 4.4 million barrel build in crude stockpiles last week.

Analysts had expected the API to report an inventory drop of 2.2 million barrels. The Energy Information Administration will issue on Wednesday official stockpiles data for last week.

“We’re just treading water if you ask me,” Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut, said, referring to Tuesday’s higher close in Brent and U.S. crude.

An oil official from the United Arab Emirates said on Tuesday that supply and demand will determine oil prices in coming months, the latest sign that Gulf members in the Organization of the Petroleum Exporting Countries were ready to weather lower prices after deciding to not cut output last month.

The tumble in crude futures has been exacerbated by price cuts made by Saudi Arabia and Iraq to exports to the United States and Asia as the largest producers in OPEC tried to compete for market share.

Additional reporting by David Sheppard in London and Adam Rose in Beijing; Editing by Michael Urquhart, Chizu Nomiyama, Richard Chang and Chris Reese

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