Global oil prices fell on Thursday on estimates showing another big supply build at the delivery point for the U.S. crude contract, with trade volatile ahead of the expiry of the front-month in benchmark Brent oil.
The reopening of the Houston Shipping Channel for oil imports and the possibility of higher total U.S. oil inventories stemming from a tentative deal to end a U.S. refinery strike added to the bearishness across the oil futures complex. Gasoline prices
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Marine traffic in the Houston channel had been partially halted after Monday's collision between a tanker and a bulk carrier, and reopened after the removal of liquid cargo from the ship’s breached tanks.
"The ship channel opening allows crude to get to refineries and the expectation is that with margins strong, refiners will produce as much as they can and this is putting some pressure on oil futures," said Phil Flynn, analyst at Price Futures Group in Chicago.
In the case of the strike, twelve refineries with a fifth of U.S. refining capacity were hit by work stoppage over the last 40 days, the largest such walkout in 35 years.
Brent's premium to U.S. crude
Oil prices had risen earlier after the dollar's rally stalled on weak U.S. February retail sales data. Dollar-denominated commodities, such as oil, become more appealing to holders of other currencies when the greenback depreciates. [FRX/]
U.S. crude fell after market data provider Genscape estimated a stock build of 2.2 million barrels since Friday at the Cushing, Oklahoma, delivery point for oil, traders said. The estimate came after U.S. government data showing Cushing stocks rose by 2.3 million barrels in the week to Friday. [EIA/S]
"The Cushing estimate shows more of the same old for U.S. crude - intense amounts of supply and shaky demand," said John Kilduff, partner at New York energy hedge fund Again Capital.
Brent slid as uncertainty crept into the market ahead of the Monday expiry of its front-month contract, some traders said.
(By Barani Krishnan; Additional reporting by Robert Gibbons in New York, Himanshu Ojha in London and Keith Wallis in Singapore; Editing by Dale Hudson, David Evans, G Crosse, Jane Merriman, Chris Reese, Diane Craft and Meredith Mazzilli)