The decline in the dollar, under pressure from growing expectations that the Federal Reserve will maintain its stimulus for the time being, overshadowed concerns sparked by an industry report showing a surprise rise in US crude and gasoline stockpiles, Reuters said.
Brent crude had gained 22 cents to $102.65 per barrel by Thursday morning, after settling $1.80 lower in its biggest slide in percentage terms since 1 May. US oil climbed 3 cents to $93.16, after ending $1.88 lower.
“We may see some retracement in prices, towards $103 or mid-$103 for Brent,” Reuters quoted Newedge commodity sales manager Ryoma Furumi as saying from Tokyo.
“But the market will keep a close eye on movements in the forex and equity markets.”
A weak dollar boosts oil as it makes commodities priced in the greenback cheaper for holders of other currencies. The previous session’s plunge was in part due to a slide in US equity markets, Reuters said.
American Petroleum Institute, API, data on Wednesday showed a 4.4 million barrel increase in US crude inventories for the week to 24 May. That was much higher than a Reuters forecast for a fall of 400,000 barrels.
The API reported a 1.9 million barrel build in gasoline stockpiles for the week, led by a nearly 1.2 million barrel increase on the Gulf Coast. Gasoline inventories were forecast to have risen 100,000 barrels for the week.
Investors awaited data from the Energy Information Administration due later on Thursday for more clues on the outlook for US demand.
Brent is expected to rebound to $103.14 per barrel, while US oil is expected to rebound into a range of $94.14-$94.58, according to Reuters technical analyst Wang Tao.