Oil down on Cushing build worry, US crude off six-month high

The development will revive oil industry fears that major producers are embarking again on a battle for market share, especially after Riyadh threatened to raise output steeply if no freeze deal were reached.

NEW YORK: U.S. oil prices dipped on Thursday after jumping to six-month highs, when buying on a forecast for tighter global supplies gave way to selling on signs of another storage build at the hub for U.S. crude futures.

In early trade, U.S. crude's West Texas Intermediate (WTI) futures surged to November peaks as the International Energy Agency raised its 2016 global oil demand growth forecast to 1.2 million barrels per day (bpd) from 1.16 million in April.

Brent crude futures also rallied early as the IEA noted output from Nigeria, Libya and Venezuela down 450,000 bpd from a year ago.

But by 12:16 p.m. EDT (1612 GMT), Brent was down 51 cents, or 1 percent, at $47.09 per barrel, after rising 52 cents at one point.

WTI was down 23 cents, or 0.5 percent, at $46. It hit a six-month high of $47.02 earlier.

Both crude benchmarks slid after market intelligence firm Genscape reported a 548,923 barrels-build at the Cushing, Oklahoma delivery point for WTI futures during the week to May 10.

Some traders said a stronger dollar <.DXY> pressured oil. The greenback rose 0.4 percent against a basket of currencies, making dollar-denominated oil more expensive to holders of other currencies.

Genscape's data covered a week when some 1 million bpd in Canadian supply was offline from wildfires in Alberta's oil sands region. That crude typically flows to Cushing, so signs of a build without that supply troubled some market watchers.

"I don't know how to play this," said one market participant who provided the Genscape data to Reuters.

"I'm in a bearish frame of mind, yet someone made a pretty good argument that this week's stats will show the Canadian shutdown effect," he added.

Canadian oil sands workers have started returning to shuttered facilities.

"We had a couple of good days of upside here," Robert Yawger, director in energy at Mizuho Securities USA, said, referring to this week's rally in oil prices. "I would tend to believe as you get the headlines that are announcing flows coming back from Alberta, it would tend to put some pressure on the market here."

Brent remained on track to a weekly gain of 3 percent and WTI 2 percent, continuing the broad uptrend that has added about $20 to prices from January levels.

This week's gains were bolstered by Wednesday's U.S. government report that unexpectedly showed lower crude stocks nationwide, although Cushing inventories still rose.- Reuters