LONDON: Oil prices dropped more than $1 on Thursday, extending big losses in the previous session as record high inventories in the United States coupled with concerns over global demand had cut short a four-day rally.
Oil markets remain highly volatile, with U.S. crude losing 9 percent on Wednesday in one of its biggest routs. In the previous four sessions, prices had rallied almost 19 percent from their lowest in nearly six years.
Brent crude for March delivery had dropped $1.02 to $53.14 a barrel by 0633 GMT (1.33 a.m. EST), after touching $55 a barrel earlier in the day. The contract had settled $3.21 or 5.5 percent lower the previous day.
U.S. crude traded 97 cents lower at $47.48 a barrel. The contract climbed above $49 a barrel earlier, after slumping on Wednesday on the large build-up in U.S. inventories.
U.S. crude stocks increased by 6.3 million barrels last week, rising for the fourth consecutive week to hit a record high of 413.06 million barrels, data from the Energy Information Administration showed.
Rising stockpiles come as seasonal demand is expected to fall in the second quarter as refineries enter spring maintenance.
“As weak fundamentals re-emerge in crude oil markets, further downside risk to oil prices is likely to persist,” analysts at ANZ said in a note.
Prices initially rose on Thursday on optimism that steps by China’s central bank to pour fresh liquidity by lowering banks’ reserve requirements would spur demand for energy there.
Crude prices began to rise last week from near six-year lows, in part due to a reported downturn in U.S. rig activity that could eventually dampen rapid growth in shale oil production.
“However, production from existing completed wells is currently unaffected and is contributing to consistent weekly stock builds,” analysts at BNP Paribas said in a note.
“The resulting drop in demand for crude at refineries is likely to lead to further large crude inventory builds,” BNP Paribas said.
