Oil reverses early losses, gains 1% as dollar falters

The oil tanker 'Devon' prepares to transfer crude oil from Kharg Island oil terminal to India in the Persian Gulf, Iran, on March 23, 2018.
Ali Mohammadi | Bloomberg | Getty Images

Oil rose 1% on Thursday, boosted by a weaker dollar and the announcement that the United Kingdom and the European Union had reached a deal on Brexit. Industry data did show a larger-than-expected build-up in U.S. inventories.

Global benchmark Brent crude oil settled  52 cents higher at $59.94. U.S. WTI crude oil was up 65 cents, or 1.2%, to settle at $53.99.

U.S. crude inventories soared by 9.3 million barrels to 434.9 million barrels in the week to Oct. 11, the U.E. Energy Information Administration said.

Analysts had estimated U.S. crude inventories rose by around 2.8 million barrels last week.

"The U.S. sanctions imposed on the Chinese shipping company COSCO are seriously denting demand for imported crude oil... This has a profound impact on U.S. crude oil inventories as reflected in last nights API report," said Tamas Varga, an analyst at PVM Oil Associates.

"U.S. refinery maintenance is not helping to reverse the current trend and further builds in U.S. crude oil inventories can be expected in the next few weeks."

The United States imposed sanctions on COSCO Shipping Tanker (Dalian) Co and subsidiary COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co for allegedly carrying Iranian crude oil.

Adding to concerns about the global economy - and therefore oil demand - data from the United States showed retail sales in September fell for the first time in seven months. Earlier data showed a moderation in job growth and services sector activity.

Still, the new Brexit deal helped limit the fall in oil prices. Prime Minister Boris Johnson said that Britain and the EU had agreed a "great" new Brexit deal and urged lawmakers to approve it at the weekend.

European Commission President Jean-Claude Juncker also said Britain and the EU had agreed a deal.

However, the Northern Irish party Johnson needs to help ratify any agreement has refused to support the deal.

Hopes of a potential U.S.-China trade deal also supported crude prices. China's commerce ministry said on Thursday that China hoped to reach a phased agreement with Washington as early as possible, and make progress on canceling tariffs on each others' goods.