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US crude oil drops 3% to settle at $46.31

Crude oil futures tumbled on Thursday after the Energy Information Administration announced the largest build in U.S. crude stocks in at least 14 years.

U.S. crude settled at $46.31 per barrel, down 3.1 percent on the day, having reached a high of $49.09 earlier in the session. Brent crude futures last traded at $48.50 a barrel, down 44 cents, off a session peak of $50.45.

Crude stocks rose by 10.1 million barrels to a total of 397.9 million, the highest level for this time of year in at least 80 years, the EIA said. The increase was much greater than the 2.6 million barrel build traders predicted in a Reuters poll.

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The market was waiting for a catalyst like the EIA report to break out either positive or negative, said Eli Tesfaye, senior market strategist at RJO Futures.

"There's no factor right now stabilizing this market," Tesfaye said. "There's definitely a race to the bottom here."

The inventory build included a 2.91 million barrel rise at Cushing, Oklahoma, the delivery point of the U.S. crude contract. The U.S. supply glut has been a major contributing factor to the 60 percent decline in oil prices over the past several months.

Adding further pressure to prices on Thursday was a bond-buying program announced by the European Central Bank to bolster the euro zone economy. ECB President Mario Draghi said the bank would buy 60 billion euros ($69 billion) of government bonds a month until the end of September 2016, exceeding market expectations.

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The program is expected to add strength to the dollar, which is already gaining support from an expected U.S. interest rate hike and a U.S. economy that is growing while Europe and Asia slow.

While the ECB's quantitative easing may support the European economy, there will be a lag before any increase in demand can support oil prices, said Tony Headrick, energy market analyst at CHS Hedging LLC.

"It's going to be a longer process for the European economy to bounce back," Headrick said.

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In a market structure known as a contango, Brent crude prices for delivery this March are $10 a barrel cheaper than those for March 2016, making it attractive to buy oil now and put it into storage for sale later, traders say.