Investing.com -- U.S. crude inched down on Wednesday, remaining near 12-year lows, as investors reacted to an unexpected draw in U.S. crude inventories last week and continued speculation that a host of major global producers could cut output in order to stem the prolonged downturn in oil prices worldwide.
On the New York Mercantile Exchange, WTI crude for March delivery traded between $27.27 and $29.20 a barrel, before settling at $27.55, down 0.38 or 1.36% on the day. Since spiking more than 8% last Wednesday, U.S. crude future have closed lower in five straight sessions while trading below $30 a barrel in each of the last three days. The front month contract for WTI crude is close to falling below $26.19, its level on January 20 when it dropped to its lowest amount since 2003. Texas light, sweet futures have followed up a dismal year in 2015 by slumping more than 25% on the new year.
On the Intercontinental Exchange (ICE), brent crude for April delivery wavered between $30.35 and $31.88 a barrel, before closing at $30.91, up 0.62 or 2.06% on the session. With the slight gains, North Sea brent futures halted a five-day losing streak during which prices fell below $31 a barrel for the first time in two weeks. On Tuesday, brent prices plunged more than $2.50 a barrel amid continuing worries related to the ongoing global supply glut.
While brent futures have performed better than their U.S. counterpart since the start of February, the international benchmark is still down by 15% since January 1.
On Wednesday morning, the U.S. Energy Information Administration (EIA) said in its Weekly Petroleum Status Report that U.S. commercial crude oil inventories for the week ending on February 5, decreased by 754,000 barrels from the previous week. At 502.0 million barrels, U.S. crude oil stockpiles still remain near levels not seen for this time of year in at least the last 80 years. Total motor gasoline inventories also increased by 1.3 million barrels last week, extending gains from the previous four weeks.
Following a significant build of 7.792 million barrels a week earlier, analysts expected an increase of at least 2.85 million barrels for the period. A bearish report by the American Petroleum Institute on Tuesday evening also did little to temper expectations, after the API reported a build of 2.4 million barrels last week. Crude inventories at this time of the year typically rise sharply as refineries prepare for the summer driving season.
Meanwhile, U.S. production fell by 28,000 barrels per day to 9.186 million bpd last week, marking the first time output dipped below the 9.2 million threshold on the new year. U.S. crude futures briefly turned positive in afternoon trading, before reversing course near the end of the session.
Elsewhere, Iran oil minister Bijan Zangeneh told reporters on Tuesday that his nation is willing to negotiate with Saudi Arabia on measures that could help stabilize persistently low oil prices. At the same time, Igor Sechin, the Kremlin's oil chief, floated a proposal that would require major oil producers to cut output by as much as 1 million barrels per day in the coming weeks.
"We support any form of dialogue and cooperation with OPEC member states, including Saudi Arabia," Zangeneh told the Islamic Republic News Agency. "If there were a strong political will, the price of oil would have been balanced within one single week."
Investors have expressed intense skepticism in recent weeks that such a deal can be reached.
In Washington, Federal Reserve chair Janet Yellen noted in testimony before the U.S. House of Representatives Financial Services Committee that the considerable price declines in oil has led to an increase in layoffs in the energy industry.
"We're taking account of the fact that the energy sector has been hard hit," Yellen testified. "We're seeing massive drawbacks in drilling activity and that's rippling through to manufacturing where output has been depressed."
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose by more than 0.35% to an intraday high of 96.77. Before Yellen's testimony, the index was up modestly on the day by 0.15%.
The index tumbled by more than 1% on Tuesday to an intraday low of 95.68, its lowest level since late-October. Since the Fed released its latest monetary policy statement on Jan. 27, the dollar has fallen by approximately 2.85%.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.