(MENAFN- The Peninsula) The selloff in oil paused yesterday for the first time in five days, with traders appearing to take stock of the market's rout after crude prices lost nearly 10 percent over two days and benchmark Brent fell to below $50 a barrel.
Support for oil emerged after weekly data for US crude inventories showed a surprising drop last week, although gasoline and distillates stocks still rose more than expected.
Crude prices, down earlier in the day after the first negative reading in five years for euro zone inflation, turned positive with the inventory data issued by the US Energy Information Administration (EIA).
Brent's front-month contract hovered near $51 a barrel by 12.25pm ET (1725 GMT), down about 10 cents from Tuesday's close. Brent hit a session low of $49.66 earlier after the data showing eurozone consumer prices fell by more than expected in December.
US crude was up 70 cents at $48.63, after rallying earlier to $49.31.
Some traders said oil markets could be at a crossroads after losing over half their value from June highs, especially after the astounding 10 percent drop in the past two days.
Others thought yesterday's price action was just a reprieve ahead of another leg lower.
"I would call this a dead cat bounce," said Tariq Zahir, managing member at Tyche Capital Advisors in Laurel Hollow in New York. "Nothing's fundamentally changed. These people that have gone trying to pick a bottom have been wrong for weeks on end."
The EIA said US crude inventories fell by just over three million barrels last week, versus analysts' expectations for a build of 880,000 barrels.
But stocks at the Cushing, Oklahoma, delivery hub for US crude rose by more than 1 million barrels. Gasoline inventories surged by over 8 million barrels and distillate stockpiles jumped by more than 11 million barrels.
Some analysts said better-than-expected US jobs data on Wednesday could have aided sentiment in oil. Private employers in the United States added 241,000 jobs in December, beating the median forecasts of analysts.
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