Investing.com -- Domestic oil futures fell sharply on Thursday afternoon amid an unexpected decline in U.S. retail sales, reversing previous gains in morning trading.
On the New York Mercantile Exchange, April deliveries for WTI Crude dropped 2.09% or 1.00 to $47.17 a barrel as prices for Texas light sweet continued on a downward path for the week. Prices hovered between $46.89 and $48.75 on a volatile day of trading.
On the Intercontinental Exchange (ICE), brent crude oil for April delivery fell 0.42% to $57.47 a barrel to offset Wednesday's gains. Trading for the international benchmark was as equally volatile, ranging from a low of $56.75 to $59.15 on Thursday.
In U.S. afternoon trading, the spread between brent and WTI edged up to $10.30 from Wednesday's close of $9.73. The spread peaked at approximately $13 early last week.
Crude prices peaked on Thursday morning ahead of the U.S. Commerce Department's report that retail sales dropped 0.6% in February. While the figure decreased for the third consecutive month, economists had only forecasted a decline of 0.3% for the month.
Shortly after, a separate report indicated that core retail sales excluding automobiles, gasoline and food remained virtually unchanged one month after experiencing a 0.1% decline in January.
Prices continued to move up slightly in morning trading, following the re-opening of the Houston Shipping Channel for oil imports. The channel closed after a vessel collision between a tanker and a Liberian bulk carrier earlier this week prompted a refinery rate cut. Elsewhere in Houston, progress in negotiations between a union representing refinery workers and the Shell Oil Company provided encouraging signs that the two sides could end a 40-day work stoppage.
WTI crude futures experienced their biggest fall around Noon, before closing down for the session. The unstable day of trading came one day after inventory supply growth slowed from all-time record highs.
The U.S. Energy Information Administration (EIA) said crude oil inventories increased by 4.5 million barrels last week, in comparison with expectations of a 4.4 million increase. A week earlier, however, crude oil inventories nationwide grew by 10.3 million barrels – its largest weekly increase since 2002. For the week of Feb. 19, the EIA found that WTI crude inventories rose by 8.4 million barrels.
The modest rise might ease concerns that the Cushing Oil Hub in Oklahoma could reach full capacity over the next two months. While crude oil inventories nationwide have peaked at 448.9 million barrels, the most in 80 years, capacity at Cushing is approximately at a level of 65%. If inventories grow at its current rate, Cushing could reach full capacity by June. Previous estimates forecasted that Cushing could reach a 100% level before the end of April. In the U.S. oil is being pumped at its fastest rate in more than three decades, even as the rig count declines exponentially.