Oil prices were down slightly on Thursday, posting their first weekly loss in over a month, under pressure from record high U.S. stockpiles, a strong dollar and weakening equity markets.
Despite the stumble, oil prices remain about 50 percent higher from multi-year lows hit in January from glut worries. The declining U.S. oil output and strong gasoline demand played a role in the rebound but it was the hint by some major producers' plans to freeze output at January's highs that steadied prices.
The number of oil rigs operating in the United States fell by 15 in the previous week, despite the increase in the number of rigs after 12 weeks of cuts.
Crude Futures Down 6%
With crude futures losing as much as 6 percent since Tuesday's settlement — their biggest slide in two days since mid-February — analysts said the oil rally of the past five weeks that brought prices up from mid-$20 levels may be unraveling.
U.S. government data showed crude stockpiles jumped 9.4 million barrels last week, three times more than forecast by analysts in recent polls.
According to Pete Donovan, a broker at Liquidity Futures in New York, "After last week's increase of one rig, some may have assumed that the continuing decrease in rig counts was finally abating. Apparently, not so."
Brent crude futures were down 2 cents at $40.45 a barrel, a nearly 3-percent drop on the week, its biggest weekly slide since mid-January.
U.S. crude futures settled down 33 cents, or 0.8 percent, at $39.46 a barrel, losing about 5 percent for the week, its first weekly loss since mid-February.