U.S. September crude ends higher at expiry, Brent slumps

A pump jack is seen at sunrise near Bakersfield, California October 14, 2014. REUTERS/Lucy Nicholson/Files

By Robert Gibbons

NEW YORK (Reuters) - Expiring front-month U.S. crude prices settled higher on Thursday in volatile trading after slumping to a fresh 6-1/2-year low as a supply glut and concerns about China's economy pressured Brent crude.

A weaker dollar and the formation of the first hurricane of the 2015 Atlantic season were supportive to crude, even with Hurricane Danny still far from affecting any land or oil infrastructure. [USD/]

U.S. futures retested support near $40 a barrel early in the session, falling to their lowest level since 2009, and Brent fell to a fresh October contract low above $46 a barrel as a global supply glut and concerns about sputtering growth in China continued to weigh on oil prices.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan shed 1.5 percent to a two-year low, as anxiety about global economic growth pressured equities in Europe and the United States. [MKTS/GLOB]

"Global equities are a negative price driver for the oil and broader commodity complex," Dominick Chirichella, senior partner at Energy Management in New York, said in a note.

U.S. September crude oil rose 34 cents to settle and go off the board at $41.14 a barrel, after falling to $40.21.

U.S. October crude posted a five-cent gain to settle at $41.32, but turned lower in post-settlement trading. Earlier in the session it fell to $40.50, a contract low.

Brent October crude fell 54 cents to settle at $46.62. It extended losses to a contract low of $46.06 by 4:25 p.m. EDT (2025 GMT) in post-settlement trading.

"The U.S. stock market's weakness pressured Brent late and the Greek prime minister's resignation also is causing worry about Europe's economy," said Phil Flynn, analyst at Price Futures Group in Chicago.

U.S. crude inventories rose 2.6 million barrels to 456.21 million barrels last week, the Energy Information Administration said in a report on Wednesday, as imports rose and refinery utilization dropped.

Analysts had been expecting a stock draw, and the news pushed U.S. crude down more than 4 percent on Wednesday.

U.S. RBOB gasoline had the biggest percentage loss in the oil futures complex, dropping 2.46 cents, or 1.5 percent, to settle at $1.5346 a gallon.

"The rotation in downside selling leadership to the gasoline market during the past week appears to reflect heavy speculative liquidation," Jim Ritterbusch, president at Ritterbusch & Associates in Galena, Illinois, said in a research note.

The front-month September contract's premium to October has been reduced to less than 14 cents a gallon this week after it was above 21 cents a gallon on Aug. 12.

U.S. benchmark distillate futures, the ultra-low sulphur diesel contract, also ended lower on Thursday.

(Additional reporting by Lisa Barrington in London and Henning Gloystein in Singapore; Editing by Marguerita Choy and Paul Simao)