Oil prices steadied on Thursday after a weaker dollar helped offset the negative impact of rising U.S. stockpiles, which drove U.S. crude prices to near three-month lows.
Crude oil stocks in the United States rose 2.5 million barrels last week to above the five-year seasonal average, according to data from the Energy Information Administration (EIA), trumping expectations for a 2.3 million-barrel drop.
U.S. September crude futures were 18 cents higher by 0827 GMT (4.27 a.m. EDT) on Thursday at $49.37, after having fallen $1.67 on Wednesday to settle below $50 for the first time since April.
Brent crude was up 9 cents at $56.19 a barrel, after settling down 91 cents.
Brent has lost around 12 percent in July, its largest one-month fall since March, pummeled by concern about the ability of the global economy to absorb a surplus of oil.
The oil glut looks set to grow as an Iranian nuclear deal with the West is likely to release millions of barrels of additional supply onto world markets.
“The bears are still in control of the market,” PVM energy analyst Tamas Varga said.
“A close below ($55.60 for Brent) is a sell and, in that case, there is nothing really that could stop this contract from falling down to $53.19, the daily low in the August contract on Jan 13,” Varga added.
Still, OPEC delegates from Gulf states and other nations say the recent drop in oil prices is likely to be short-term. They say lower prices will not deter the cartel from keeping output high to defend market share.
The dollar headed for its first weekly loss in a month but held near a three-month high, which tends to make it more profitable for non-U.S. investors to sell dollar-denominated assets such as oil or gold.
“Fundamentally there’s not a lot to change the picture dramatically in the short term. Prices seem to be contained in a range for now,” said Ben Le Brun, market analyst at OptionsXpress in Sydney.
Brent’s premium to the U.S. benchmark stood at $6.80 a barrel. The spread has widened more than $3 this month, the largest such move since February.