Investing.com -- Crude futures pared most of its earlier gains on Thursday, after an unexpected build in U.S. inventories last week pushed inventories to near full storage capacity.
On the New York Mercantile Exchange, WTI crude for March delivery wavered between $30.55 and $31.95 a barrel before settling at $30.67, up 0.01 or 0.03% on the day. It marked the first time in nearly two weeks that U.S. crude futures remained above $30 a barrel for the entirety of a session. A day earlier, the front month contract for WTI crude surged more than 8%, after Iran oil minister Bijan Zanganeh said his nation supports a so-called Doha Agreement, in which four top producers have pledged to freeze output at their January levels in an effort to bolster persistently low prices.
On the Intercontinental Exchange, brent crude for April delivery traded between $34.09 and $35.73 a barrel, before closing at $34.20, down 0.31 or 0.90% on the session. North Brent Sea futures also soared more than 8% on Wednesday, capping a four-day stretch where the international benchmark for crude jumped more than $4 a barrel or 15%.
On Thursday morning, the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that commercial crude inventories for the week ending on February 12 rose by 2.1 million barrels from the previous week. At 504.1 million barrels, U.S. crude oil inventories remain at historically high levels for this time of year. Total motor gasoline inventories increased by 3.0 million barrels last week, while distillate fuel inventories rose by 1.4 million barrels.
Although the build fell below consensus estimates of a 3.9 million barrel increase, investors for the most part anticipated a significant draw after the American Petroleum Institute reported a weekly decline of 3.3 million barrels on Wednesday evening. Both reports were released a day later than usual this week due to Monday's Presidents Day holiday.
At the Cushing Oil Hub in Oklahoma, inventories rose by only 36,000, defying expectations for an increase of 500,000. The figures exacerbate concerns that Cushing officials could be denying storage requests, as capacity at the nation's largest storage facility approaches its limit. Furthermore, a number of analysts found the data to be confounding given that Genscape, Inc. estimated a weekly build of 705,000 just days earlier.
U.S. production, meanwhile, fell sharply by 51,000 barrels per day to 9.135 million bpd for the week. It represented the fourth straight week of weekly declines and the second consecutive week that output dipped below the 9.2 million bpd threshold.
In the Middle East, United Arab Emirates oil minister Suhail bin Mohammed al-Mazrouei criticized Iran for their intentions to continue to pump oil, while their counterparts in the region are advocating a production freeze. It came one day after Zanganeh said he backed a plan by Saudi Arabia, Russia, Venezuela and Qatar to cap their production at levels reached last month. Still, Zanganeh stopped short of approving any deal which requires Iran to limit their production before it can return to pre-sanction levels from 2007.
“Anyone who is introducing more supply into the market in the current situation is going to make it worse. That’s obvious, I don’t think we need a scientist to tell you that," Mazrouei told reporters at a conference in Abu Dhabi. "They are entitled to produce whatever they want, whether it’s 100,000 or 200,000 or 500,000 but (it's not) going to help the situation.”
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose by more than 0.15% to an intraday high of 97.09. Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.