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Brent crude futures were up by 20 cents on the day at $54.56 a
barrel by 1100 GMT, while U.S. West Texas Intermediate (WTI)
crude futures were up 13 cents at $51.28 a barrel.
The U.S. Energy Information Administration (EIA) reported an
increase of 1.57 million barrels in crude inventories late on
Wednesday, bringing total U.S. stocks to a record high of 535.5
million barrels.
"Overnight crude inventory numbers pulled the rug out from under
the feet of the oil rally," said Jeffrey Halley, senior analyst
at futures brokerage OANDA.
The record crude inventories came as U.S. oil production rose by
52,000 barrels per day (bpd) to 9.2 million bpd.
"The U.S. crude oil production profile is a mirror image of
where it was last year, when at the end of the second quarter,
production was 600,000 bpd lower than at the start of the year
and this year is going to be the opposite," said Olivier Jakob,
at consultancy Petromatrix.
"By the end of the second quarter, you could have U.S.
production up by 1 million bpd."
Because of the glut, U.S. crude exports have risen to a record
1.1 million bpd. Most cargoes are going to Asia, where traders
say there are early signs of a tightening market due to efforts
led by the Organization of the Petroleum Exporting Countries
(OPEC) to cut output in an effort to prop up prices.
"The global picture is more important (than just the U.S.) and
stocks are being drawn," said Oystein Berentsen, managing
director at trading company Strong Petroleum in Singapore.
In the short-term, he said, a lot of oil was being sold out of
storage around the world, adding to the imminent glut.
But Berentsen warned that once a significant amount of crude had
been sold out of inventories, "then you get the full effect (of
tighter supplies)."
(Additional reporting by Henning Gloystein in SINGAPORE; editing
by Jason Neely and Susan Thomas)
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