×

US oil settles down 2.3%, at $47.05 a barrel

Oil
Vincent Kessler | Reuters

Global oil prices weakened on Thursday, with both benchmark Brent and U.S. crude surrendering early gains in volatile trading before the expiry of their front-month contracts and in fears of a supply build at the delivery point for U.S. oil.

The reopening of the Houston Shipping Channel for oil imports and the potential nearing of a deal to end a U.S. refinery workers strike contributed to market bearishness, traders said.

"The ship channel opening allows crude to get to refineries and the expectation is that with margins strong, refiners will produce as much as they can and this is putting some pressure on oil futures," said Phil Flynn, analyst at Price Futures Group in Chicago.

Read More Cramer's making a bold call on oil

"The strike news is mainly psychological in that it hadn't yet had a big impact on production, but a settlement would soothe concerns about the possibility the strike could eventually hurt output."

Oil prices had earlier risen after the dollar's rally stalled on surprisingly weak U.S. February retail sales data. Dollar-denominated commodities, such as oil, become more appealing to holders of other currencies when the greenback depreciates.

Front-month U.S. crude closed down $1.12, or 2.33 percent, at $47.05 a barrel. It rose nearly 60 cents in earlier trade.

Benchmark Brent's front-month was down 50 cents, at $57 a barrel, after rising more than $1 earlier.

U.S. crude prices fell after market data provider Genscape estimated a stock build of 2.2 million barrels since Friday in the Cushing, Oklahoma, delivery point for oil, traders said. The estimate came after U.S. government data showing Cushing stocks rose by 2.3 million barrels in the week to Friday.

"The Cushing estimate shows more of the same old for U.S. crude—intense amounts of supply and shaky demand," said John Kilduff, partner at New York energy hedge fund Again Capital.

Read More These oil driller stocks could be winners: Analyst

Brent also slid after trading higher to U.S. crude as uncertainty crept into the market ahead of next week's expiry of the April front-month contracts for both oils. But Brent's premium to U.S. crude still widened to a near one-week high.

The Brent-U.S. crude spread, one of the biggest volume trades in oil, widened by more than $1 earlier to above $10 a barrel, its highest since Friday.