US benchmark West Texas Intermediate rose 15 cents to $48.32 while Brent crude rose 56 cents to $58.10 in afternoon trade.
The US Department of Energy said Wednesday crude oil inventories surged by 4.5 million barrels in the week to March 6 to 448.9 million, the highest level since the beginning of the weekly data series in 1982.
“We expect heavy downward pressure today for crude prices,” said Daniel Ang, investment analyst at Phillip Futures in Singapore.
Ang said the pressure on prices was mainly due to the “realisation that US production remains strong” despite the record-level inventories.
Crude prices lost some 60 percent of their value to decline to about $40 between June and late January owing to an oversupply in world markets, a weak global economy and the strong dollar.
Prices have since rebounded following a slowdown in US oil-drilling activities, but analysts say volatility is likely to continue for some time.
Analysts said investors were monitoring the progress of talks between the US and other major Western powers and Iran on Tehran’s contested nuclear programme as a deadline at the end of March nears.
The Islamic republic has been crippled by a series of UN and US sanctions, including on crude exports, aimed at bringing an end to its nuclear drive, which the West says is being used to develop atomic weapons. Iran denies the allegations.
“Prices are likely to remain in a tight range for the next two weeks until the market gets more clarity on the ongoing negotiations between Iran and the US over the lifting of sanctions,” said Sanjeev Gupta, head of the Asia-Pacific oil and gas practice at business consultancy EY. -AFP
