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Brent crude oil fell back below $55 a barrel on Thursday after Kuwait said the Organization of the Petroleum Exporting Countries (Opec) had no choice but to keep production steady, refocusing the market on global oversupply as the dollar recovered from sharp losses in the previous session.
Brent had rallied by more than $2 a barrel on Wednesday after the Federal Reserve indicated it would raise US interest rates slower than previously thought, overshadowing data showing US crude stocks at a record level.
The dollar fell by its most in six years after the comments from the Fed, boosting oil and metals priced in the greenback as they became cheaper for holders of other currencies. But on Thursday, the dollar snapped back by more than 1.5 per cent .
Brent for May delivery was down $1.39 at $54.52 a barrel by 1256 GMT, having hit a low for the session of $54.47 and after rising almost 4.5 per cent on Wednesday. Brent fell from highs above $115 last June to near $45 in January.
US crude for April delivery fell by $1.76 or almost 4 per cent to $42.90 a barrel, close to a six-year low as the contract heads for expiry on Friday. The May contract was down $1.53 at $45.12 a barrel, with its discount to Brent near $9.50.
Kuwait's oil minister said on Thursday he was concerned by the 50 percent drop in oil prices since June, but said OPEC had no choice but to keep output steady.
"We don't want to lose our share in the market," Ali al-Omair told reporters.
The Organization of the Petroleum Exporting Countries decided in November to maintain production levels even if it meant lower prices, as the group feared fast-growing U.S. shale output threatened its position.
While higher-cost U.S. production is expected eventually to be slowed by the drop in price, so far output has continued to rise, boosting crude inventories to their highest-ever level.
U.S. crude stocks rose by a further 9.6 million barrels last week, data from the Energy Information Administration showed, while stocks at the U.S. benchmark contract's delivery point in Cushing, Oklahoma hit the highest on record.
A pushback in the timing of U.S. interest rate increases could give oil producers more breathing space for financing, Daniel Ang, an analyst at Phillip Futures, said in a note.
"Oil producers (will be) able to expand their businesses or even tide across this period of low prices with cheaper financing," Ang wrote.
On Thursday data showed the number of Americans filing new claims for unemployment benefits rose only modestly last week, indicating the labour market remained on solid footing.
At nuclear talks in Lausanne, six major powers and Iran remained far apart, a European negotiator said on Thursday. Any deal around Iran's nuclear programme could see sanctions gradually lifted, adding up to 1 million barrels of oil supply to the market.
