The American Petroleum Institute (API) reported on Tuesday that U.S. crude inventories rose by 2.7 million barrels last week, compared with analyst expectations for 3.2 million barrel draw.
"The API set the U.S. glut alarm bells ringing," Stephen Brennock of oil brokerage PVM said.
The falling U.S. dollar, however, supported prices. A weak greenback makes dollar-denominated commodities such as crude oil cheaper to holders of other currencies.
Supply disruptions in Nigeria also lent support.
ExxonMobil issued a force majeure on the Qua Iboe crude oil export terminal last week after a fire hit the facility and injured two workers.
A source told Reuters production is expected to resume in early January.
The stream was expected to load about 180,000 barrels per day (bpd) in December and 150,000 bpd in January.
The number of Americans filing first-time claims for unemployment benefits unexpectedly fell last week, though remained elevated as more businesses faced restrictions and consumers hunkered down amid rising COVID-19 cases.
Oil markets remain jittery about the future recovery of demand as a new, highly infectious variant of the novel coronavirus has hit Britain, prompting a slew of countries to shut their borders to the country.
Oil prices came under pressure earlier in the session after U.S. President Donald Trump threatened not to sign an $892 billion coronavirus relief bill, saying he wants Congress to increase the amount in the stimulus checks that lawmakers approved on Monday.
(Additional reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore, editing by Louise Heavens, Kirsten Donovan)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
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