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US oil closes at $40.75 after dipping below $40 a barrel

Crude oil settled 0.2 percent higher on Wednesday following the release of the Federal Reserve's latest policy meeting minutes, after crude earlier snapped the $40-a-barrel support following an eighth straight week of builds that put U.S. stockpiles near record highs.

The minutes indicated a majority of the committee believes an interest rate hike will be appropriate in December, but central bankers also debated evidence the U.S. economy's long-term potential may have permanently shifted lower.

Higher rates typically drive the dollar higher, making it costlier for holders of the euro to own oil and other dollar-denominated commodities.

Oil
Vincent Kessler | Reuters

The U.S. Energy Information Administration said crude inventories grew by 252,000 barrels last week, versus the near 2 million-barrel build forecast by analysts in a Reuters poll.

While the rise was smaller than thought, it brought crude stockpiles across the United States to 487.3 million barrels in the week to Nov. 13, within a hair of their modern-day record of 490.9 million barrels set in April.

"This week's data point is unlikely going to relieve the selling pressure on the oil markets with U.S. stocks at record levels for this time of year and knocking on the all-time high set earlier in the year," said ," said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.

"Production remains resilient even in this low price environment," he added.

U.S. crude's West Texas Intermediate (WTI) futures turned positive and settled up 8 cents, at $40.75 a barrel after hitting a session low of $39.91. The last time WTI traded below $40 was on Aug. 27.

Brent crude futures were up 58 cents at $44.15.

The premium, or contango, for second-month WTI versus the front month hit near seven-month highs, highlighting the better fundamentals for long-dated oil contracts. For weeks, the oil market has been pricing crude for future delivery at much higher rates as traders keep millions of barrels in storage with the hope of making more money in later sales.

The EIA said stockpiles at the Cushing, Oklahoma delivery hub for U.S. crude futures rose 1.5 million barrels to 56.9 million barrels.

Gasoline stocks rose 1.0 million barrels, breaking a string of declines. Distillate stockpiles , which include diesel and heating oil, fell but remained at their highest for this time of year since 2010.