US crude oil prices hover just above $40 on stockpile rise

Warmer-than-usual weather in the northeast US and a shale oil boom in the country are contributing to the rise in stockpiles

US crude prices were hovering just above $40 in early Asian trading on Thursday, after dropping more than 4% a day earlier, on an unexpected rise in US stockpiles that is compounding a global supply glut.

US crude was trading at $40.23 per barrel at 0005 GMT on Thursday, up 29 cents from its last settlement, but down nearly 14% since the start of November.

Crude inventories rose for the tenth straight week, climbing 1.2 million barrels in the week to November 27 in contrast to analysts' expectations of a decrease of 471,000 barrels, data from the US Energy Information Administration showed on Wednesday.

"The market was expecting a modest rundown in US crude oil inventories last week, but API and EIA have reported rises of 1.64 and 1.18 million barrels, respectively, this week," ANZ bank said on Thursday.

The inventory build will add to an oversupply that has caused a 60% price fall since June 2014. Oil production already exceeds demand by 0.5-2 million barrels per day.

Warmer-than-usual weather in the northeast United States, a major market for heating oil, and a shale oil boom in the country are contributing to the rise in stockpiles.

Moreover, the Organization of the Petroleum Exporting Countries (OPEC) is widely expected to keep its high output unchanged at a meeting in Vienna this Friday.

"Reports were the majority of OPEC members support a production cut, except for the dominant supplier Saudi Arabia," ANZ said.

Oil prices briefly turned positive on Wednesday after Tehran's oil ministry news agency Shana said that a majority of OPEC members agree on output cuts, but the report also pointed out that OPEC's top producer Saudi Arabia was not supportive of the reduction.

A strong US dollar, which hit its highest against the euro in more than seven months on Wednesday, also weighed on oil prices.

A strong dollar is a negative for oil markets as it makes greenback-dominated contracts such as crude futures more expensive for holders of other currencies.