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Oil traded below $50 a barrel in New York amid the most volatility since April 2009 after US crude inventories rose from the highest level in more than three decades.
West Texas Intermediate gained as much as 2.9 per cent, erasing an earlier decline. Prices plunged 8.7 per cent on Wednesday, the most since November. Crude inventories expanded by 6.33 million barrels to 413.1 million last week, the highest level in weekly records compiled since August 1982, the Energy Information Administration reported Wednesday.
Oil's swings have intensified since the Organization of Petroleum Exporting Countries decided in November to let rival producers deal with a global surplus that Iran's oil minister pegged at two million barrels a day in an interview with state television. That's about six per cent of the group's production last month of 30.9 million barrels a day.
"Another week, but the same story," Amrita Sen, chief oil analyst at London-based consultants Energy Aspects Ltd., said in a report. "The latest EIA statistics showed a large build in U.S. crude stocks, to another record high. The main culprit for stockbuilds was still elevated imports."
Bull Market
WTI for March delivery added $1.03 to $49.48 a barrel in electronic trading on the New York Mercantile Exchange at 1:13 p.m. London time. The contract lost $4.60 to $48.45 on Wednesday, halting the largest four-day rally since January 2009. The volume of all futures traded was about 68 percent above the 100-day average for the time of day.
Brent for March settlement gained as much as 3.8 percent to $56.19 on the London-based ICE Futures Europe exchange. The European benchmark crude's premium to WTI expanded to as much as $6.11, the widest gap since November.
Brent rebounded since mid-January from the lowest level in almost six years amid speculation that reduced investment will curb production. Chevron Corp., BP Plc and Royal Dutch Shell Plc lowered their spending targets after prices slumped.
Futures closed at $57.91 on Tuesday, more than 24 percent above the Jan. 13 close of $46.59, meeting a common definition of a bull market.
The CBOE Crude Oil Volatility Index, which measures price fluctuations using options of the U.S. Oil Fund, ended at 62.73 on Feb. 4, the highest since April 2009.
Global supply will exceed demand by 2 million barrels a day in the first half of 2015, Iranian Oil Minister Bijan Namdar Zanganeh said in an interview on state TV on Wednesday. Iran ranks as OPEC's fourth-largest producer, according to Bloomberg estimates for January.
