NEW YORK: Oil prices settled slightly lower on Tuesday, only to fall in post-settlement electronic trading as stocks slumped and industry group data showed a surprising increase in crude inventories.
Brent crude futures touched $71 a barrel before retreating, and settled down 1 cent at $70.11 a barrel in what traders characterized as profit-taking following several days of gains. West Texas Intermediate (WTI) futures fell 30 cents to settle at $65.25 a barrel.
In post-settlement trading, when volumes are thinner, prices for both benchmarks slipped in tandem with equities markets, and then dropped again after industry group American Petroleum Institute (API) reported a larger-than-expected rise in U.S. oil inventories.
At one point, WTI fell more than $1. It traded at $64.69 a barrel, down 86 cents, as of 4:42 p.m. EDT (2042 GMT).
Crude inventories rose by 5.3 million barrels in the week ended March 23 to 430.6 million, API said. U.S. inventories were expected to fall by 287,000 barrels; the U.S. Energy Department releases its figures Wednesday morning.
The dollar rebounded from a five-week low hit earlier in the session as trade tensions eased. A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies.
"The dollar index is poking up there and that's probably weighing a little bit on prices," said Phillip Streible, senior market strategist at RJO Futures in Chicago.
Brent has risen by more than 5 percent this month while WTI is up over 4 percent. They are on track for a third consecutive quarterly gain, which last happened in 2010.
While both contracts have been gaining, Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois said Brent has outperformed WTI. The spread between the two May contracts has widened, he noted, which implies OPEC's success in trimming supplies.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and other producer countries agreed more than a year ago to reduce supply.
The deal is due to expire at the end of this year, but Saudi Crown Prince Mohammed bin Salman told Reuters that OPEC and Russia were working on an agreement to cooperate for another 10 to 20 years, though that does not specifically mean cuts will go on for that long.
Still, analysts said the market's current strength may not last. Barclays Research analysts said they expected the supply deficit of the past few months to give way to a surplus on rising U.S. output.