Oil dropped a second day after US crude stockpiles expanded again, keeping supplies at the highest level in more than eight decades.
Futures fell 0.8% at the close in New York overnight after slumping 4% Wednesday.
Inventories rose by more than three times what was projected in a Bloomberg survey, while imports last week increased to the highest since June 2013, Energy Information Administration data showed. Oil also dropped as renewed prospects for higher US interest rates boosted the dollar, cutting the appeal of commodities as an alternative investment.
“There’s some follow-through from yesterday because that number was so huge,” said Bob Yawger, director of the futures division at Mizuho Securities USA in New York.
“The dollar is stronger on speculation the next interest rate increase won’t be that far off, putting pressure on the commodity.”
Oil tumbled to a 12-year low last month before rebounding on speculation the global surplus will ease as US production declines and major producers including Saudi Arabia and Russia proposed an output freeze. Iraq and the United Arab Emirates joined the list of confirmed attendees at a meeting between major exporters in Doha next month.
West Texas Intermediate oil for May delivery dropped 33 cents to settle at $39.46 a barrel on the New York Mercantile Exchange. Total volume traded was 6.3 percent below the 100-day average. Front-month futures rose 2 cents this week.