Oil futures held above $42 per barrel on Wednesday after government data showed inventories of U.S. commercial crude rose again, marking a 10th straight week of record builds.
Stockpiles of crude rose by 9.6 million barrels in the week ending March 13, the Energy Information Administration reported. Total inventory stood at 458.5 million barrels, the highest on record.
Analysts had expected stocks to build above 452 millions barrels, and industry data on Tuesday indicated stocks rose by 10.5 million barrels in the previous week.
Meanwhile, motor gasoline stocks fell by 4.5 million barrels.
Brent for May delivery was down 22 cents at $53.29 per barrel by 10:40 a.m. EDT (1440 GMT) after ending the previous session up 7 cents.
U.S. crude for April delivery stood at $42.48 per barrel, down 98 cents, after hitting a six-year low of $42.05 earlier in the session.
Earlier in the day, Brent oil prices dipped below $53 a barrel on oversupply concerns as industry data indicated U.S. crude stocks had hit a new record high.
The expiry of the Brent contract on Monday and the West Texas Intermediate forward contract on March 20 “is adding a bit of fuel, adding to volatility in the market”, LeBrun said.
Traders on Wednesday are also watching for the U.S. Federal Reserve to outline monetary policy objectives including regarding interest rates.
“If U.S. interest rate hikes would be pushed back, this would likely cause the dollar to weaken, however, only in the short run,” Singapore’s Phillip Futures said in a research note.
Global oversupply concerns have been spurred by factors including U.S. output levels, some recovery in Libya’s production and the potential for a boost in Iran’s exports should Western sanctions be lifted.
There could also be more downward pressure on prices as China pauses its build-up of strategic reserves and Asian refineries slow imports ahead of spring maintenance.