Investing.com -- WTI crude fell to fresh four-month lows on Thursday settling below $50 a barrel, as concerns related to the Iranian Nuclear Pact and a glut of oversupply in energy markets worldwide remained in focus.
On the New York Mercantile Exchange, WTI crude for September delivery traded between $48.22 and $49.62 before settling at $48.42 a barrel, down 0.73 or 1.49%. At one point, Texas Long Sweet futures plunged to its lowest level since April 2. U.S. crude future have closed lower on six of the last seven trading sessions, losing approximately 10% of its value since July 15.
On the Intercontinental Exchange (ICE), brent crude for September delivery wavered between $55.12 and $56.52 before closing at $55.24 a barrel, down 0.89 or 1.57%. Over the last month, brent futures have fallen in value by roughly 13%. Meanwhile, the spread between the international and U.S. benchmarks of crude stood at 6.82, just above Wednesday's level of 6.81 at the close of trading.
Traders continued to digest a surprising inventory build last week. In its weekly Petroleum Status Report on Wednesday, the U.S. Energy Information Administration (EIA) said U.S. crude inventories rose by 2.5 million barrels for the week ending on July 17. Analysts expected a draw of 2.2 million barrels on the week. Crude inventories nationwide are now at 463.9 million barrels the highest level at this time of year in at least 80 years. At the Cushing Oil Hub in Oklahoma, the main delivery point for NYMEX oil, its crude inventory increased by 813,000 last week, above expectations for a 300,000 build.
A rise in U.S. stockpiles is viewed as bearish for WTI crude prices as supply continues to outstrip demand. While U.S. crude output fell slightly by 4,000 barrels per day to 9.558 million last week, production levels still remain near 40-year highs. Global supply has hovered near record-levels since Opec decided to keep it production ceiling above 30 million barrels per day last November.
Elsewhere, several members of the U.S. Senate accused U.S. Secretary of State John Kerry of being "fleeced," and "bamboozled," by Iran for accepting a one-sided deal last week in Vienna. Kerry testified before Congress on Thursday morning, along with Energy Secretary Ernest Moniz and Treasury Secretary Jacob Lew in their first public appearance since the accord was struck. Kerry, however, fought back insisting that any rejection of the deal by Congress will give Iran a "green light to double the pace of its uranium enrichment, proceed full speed ahead with a heavy water reactor," and "install new and more efficient centrifuges," without facing the scrutiny of inspectors.
U.S. president Barack Obama has promised to veto any Congressional action that rejects the deal.
A completion of the accord is viewed as bearish for crude, as the easing of longstanding United Nations sanctions could allow the Gulf state to release millions of barrels of reserves into the global markets within a matter of months.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, fell to an intraday low of 96.97 before rallying to 97.20, down more than 0.4% on the session. Earlier this week, the index surged to a three-month high at 98.31.
Dollar-denominated commodities such as crude become more expensive for foreign purchasers when the dollar appreciates.