London: US crude futures edged higher Thursday after slipping 2.3^ a day earlier on a larger-than-expected build in US crude inventories.
NYMEX crude for January delivery rose 72 cents to $77.32 a barrel by 0837 GMT, after settling down $1.77 at $76.60 on Wednesday.
Brent crude rose 87 cents to $78.75 per barrel, trimming back from as high as $78.91.
Oil has traded in a $14-range this quarter, narrowing to $9 last month, bounded by a low of $72.39 when panic over Dubai’s debt situation sent commodities reeling for a few hours, and $81.06 as the upper threshold.
Wednesday’s losses, which stemmed a two-day advance, came after US government data showed crude stocks rose 2.1 million barrels last week, topping the forecast for a 400,000 barrel rise in a Reuters poll.
“The fact that oil price volatility has swiftly returned to very low levels tells us that the current range is very sticky...and also suggests to us that the oil market now appears less prone to being buffeted by macro-contagion fears,” analysts at Barclays Capital wrote in a research note.
Gasoline futures slumped on Wednesday as the data from the US Energy Information Administration showed gasoline stocks increased much more than forecast. Distillate stocks fell 1.2 million barrels, against the forecast for a 300,000-barrel drop.
Adding to the concerns over rising supply, Russia set a fourth consecutive monthly record for crude oil output in November to retain its position as the world’s largest producer.
Traders said widening spreads between nearby prices and those further in the future were also a cause for concern.
“The spread between the first and second months has blown out...Something is up,” a trader in Sydney said, adding that the big sell-off late last year was also heralded by a flare in spreads.
Front month crude traded $1.64 below the second month contract, from around $0.50 in the middle of last month.
“At this time before expiry, the spread should be 30-40 cents. Someone is selling near-dated oil, I am guessing on worries demand in the United States is falling of a cliff.