Oil Drops Again on US Stockpiles and Strong Dollar David McNew/Getty Images

Oil Drops Again on US Stockpiles and Strong Dollar

The U.S. Department of Energy reported that crude stockpiles jumped by 10.1 million barrels last week, far above analyst estimates.

LONDON - Oil prices fell Thursday after official data revealed a larger-than-expected increase in stockpiles of U.S. commercial crude, while the market was hit also by a stronger dollar, analysts said.

U.S. benchmark West Texas Intermediate (WTI) for delivery in March slid one dollar to $46.78 a barrel.

Brent North Sea crude for March edged down eight cents to stand at $48.95 a barrel in late London deals. 

"WTI tumbles as excessive oversupply causes oil stocks to surge," Fawad Razaqzada, technical analyst at trading group Forex.com, said in a note to clients.

The U.S. Department of Energy reported that crude stockpiles jumped by 10.1 million barrels last week, far above analyst estimates.

Oil prices have lost more than half their value since June, when they sat at more than $100 a barrel, mainly as a result of strong US supplies of crude.

The fall was exacerbated at the end of November when the Organization of the Petroleum Exporting Countries (OPEC) said it would maintain output levels.

Crude futures were under pressure Thursday also by a strong dollar, which rallied against the euro after the European Central Bank said it would inject more than 1.0 trillion euros of stimulus into the stagnant eurozone economy.

The pledge by ECB chief Mario Draghi for the bank to buy 60 billion euros ($69 billion) of bonds per month through to late 2016 exceeded market expectations of the monthly pace of the quantitative easing, or QE program.

A stronger dollar meanwhile makes commodities priced in the U.S. unit more expensive for buyers using rival currencies.

Further ahead, if the ECB move "results in the recovery of the eurozone, it would most definitely help improve crude demand to the region," said Daniel Ang, investment analyst at brokers Phillip Futures.

Copyright Agence France-Presse, 2015

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