NEW YORK (March 12) - Global oil prices weakened on Thursday, with both benchmark Brent and U.S. crude surrendering early gains in volatile trading before the expiry of their respective front-month contracts and fears of a new supply build at the delivery point for U.S. oil.
The reopening of the Houston Shipping Channel for oil imports and the potential nearing of a deal to end an U.S. refinery workers strike added to the bearishness of the market, traders said.
Oil prices had earlier risen after the dollar's rally stalled on surprisingly 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.
U.S. crude prices fell after market data provider Genscape estimated a stock build of 2.2 million barrels since Friday in 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.
"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.
Front-month U.S. crude was down 53 cents to $47.64 a barrel at 12:37 p.m. EDT (1637 GMT), after rising nearly 60 cents in earlier trade.
Benchmark Brent's front-month was down 38 cents at $57.16, after rising more than $1 earlier.
Brent also slid after trading higher to U.S. crude as uncertainty crept into the market ahead of next week's expiry of the April front-month contracts for both oils. But Brent's premium to U.S. crude still widened to a near one-week high.
The Brent-U.S. crude spread, one of the biggest volume trades in oil, was up 46 cents after rising more than $1 earlier rose to above $10 barrel, its highest since Friday.