US crude ends down at $48.17 a barrel; Lowest since Feb. 26

A man at a gas station in Dellwood, Mo.
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A man at a gas station in Dellwood, Mo.

Brent crude rebounded from a one-month trough on Wednesday while U.S. crude closed at its lowest since February after oil inventories in the United States hit record highs.

The U.S. Energy Information Administration said U.S. crude stockpiles rose by 4.5 million barrels last week, trumping some traders' expectations after an industry report on Tuesday posted a slight drop instead. Inventories have written new records for nine weeks now, standing at nearly 490 million barrels.

"We have to go back to the 1930s to find this much oil in the United States," said James L. Williams, energy economist at WTRG Economics in London, Arkansas.

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Last week's increase included a 2.3-million-barrel build at the Cushing, Oklahoma delivery point of the U.S. crude contract. Genscape, a market data provider, had indicated earlier this week that Cushing saw a build of just around 157,000 million barrels last week.

Front-month U.S. crude closed down 12 cents at $48.17 a barrel, its lowest close since February 26. London-traded Brent's front-month rose $1.30 to $57.70 a barrel, rebounding from a one-month low of $55.92 earlier in the session.

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"The fear of global supply glut that sent crude prices to six-year lows continues to hang over the market," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Connecticut.

"We have not seen signs of enough lower production resulting from capital spending and drilling cuts."

Brent's recovery was aided by investors playing the so-called Brent-WTI spread, when they buy one benchmark and sell the other. Brent-WTI widened to nearly $10 a barrel, after hovering at $8 and below on Tuesday, its narrowest in a month.

The dollar also pressured oil, as the greenback soared to a new 12-year high against the euro.

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The dollar index, measured against a basket of major currencies, has rallied 25 percent since last May. That makes oil and other dollar-denominated commodities priced costlier for holders of other currencies.

Crude prices fell 60 percent between June and January on fears of a global oil glut and after Saudi Arabia and other key OPEC members refused to cut output.

Russia said on Wednesday it expected to add to global oil output this year, with Energy Minister Alexander Novak predicting a rise in exports despite expectations of a production drop earlier after the price rout.