Investing.com - Crude oil prices rebounded in Asia on Thursday after a sharp sell-off overnight as investors looked to navigate the prospects of a stronger dollar and vast oversupply going forward.
On the New York Mercantile Exchange, WTI crude for January delivery rose 0.24% to $35.77 a barrel. Ahead, U.S. rig count data from Baker Hughes Incorporated (N:BHI) will set the tone.
Overnight, U.S. crude futures fell by nearly 5% on Wednesday, as a considerable build in domestic crude stockpiles last week reignited longstanding concerns of oversupply, pushing prices back down to near seven-year lows.
Previously, U.S. crude futures rallied by nearly 10% over the last two sessions after touching down to an intraday low of $34.53 on Monday, its lowest level since 2009.
On the Intercontinental Exchange (ICE), Brent crude for February delivery traded between $37.17 and $38.74 a barrel before closing at $37.40, down 1.34 or 3.46% on the day.
On Wednesday morning, the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that commercial crude oil inventories increased by 4.8 million barrels for the week ending on Dec. 11. At 490.7 million barrels, U.S. crude stockpiles remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories increased by 1.7 million barrels, while distillate fuel inventories rose by 2.6 million barrels for the week.
A week earlier, U.S. crude inventories fell by 3.6 million barrels, halting a 10-week streak of supply increases. While analysts expected a draw of 1.4 million barrels on the week, energy traders priced in a build after the American Petroleum Institute reported a supply increase of 2.3 million barrels on Tuesday afternoon after the close of trading. Already down by more than 1% in Wednesday morning's session, WTI crude immediately plunged following the release of the bearish report. At the Cushing Oil Hub in Oklahoma, the key delivery point for NYMEX crude, supply levels increased by 607,000 barrels on the week, above estimates of a 500,000 gain.
Elsewhere, investors reacted to reports that the U.S. Congress could be on the verge of repealing a 40-year ban on the majority of domestic crude oil exports. On Tuesday evening, bipartisan leaders from the House of Representatives and the Senate reportedly agreed on the framework of a $1.15 trillion spending bill that will keep the government open through next fall. The bill could proceed to a vote as early as the end of the week, Reuters reported. A lift on the ban could narrow the gap between U.S. and international crude prices by providing foreign purchasers with a cheaper substitute for oil from rivals such as Saudi Arabia and Russia.
Market players also responded to news of a quarter-rate point hike by the Federal Reserve on Wednesday afternoon, its first rate increase in more than nine years. A rate hike is viewed as bullish for the dollar, as foreign investors pile into the greenback in an effort to capitalize on higher yields.
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