Brent steady, U.S. crude down; dollar, gasoline limit oil's downside

By Barani Krishnan

NEW YORK (Reuters) - Brent oil erased most of its early losses to trade steady on Thursday on support from a weak dollar and higher gasoline prices, while U.S. crude slipped on pressure from large inventory builds.

Brent futures (LCOc1) were flat at $44.14 a barrel by 11:52 a.m. EST (1652 GMT), after hitting a session low of $43.70.

U.S. crude's benchmark West Texas Intermediate (WTI) futures (CLc1) fell 40 cents to $40.35, after hitting an intraday low of $41.05.

"The dollar is certainly helping commodities today," said Scott Shelton, energy broker and commodities specialist at ICAP (L:IAP) in Durham, North Carolina.

"But gasoline is also giving a prop to Brent and widening its crack with WTI. I'd be careful about being short gasoline."

The dollar fell to a near one-week low against a basket of currencies (DXY), making crude and other commodities denominated in the greenback more affordable for holders of currencies such as the euro . The 19-commodity Thomson Reuters/Core Commodity CRB Index (TRJCRB) headed for its biggest gain in two weeks.

U.S. gasoline futures (RBc1) jumped more than 1 percent to $1.29 a gallon after a report that Irving Oil's planned restart of the gasoline-making unit at its 300,000-barrels-per-day refinery in St. John, New Brunswick had been delayed beyond the Nov. 15 target.

The profit that refiners get for turning crude into gasoline, known in market parlance as the gasoline crack , widened to more than $13.50 a barrel, the highest in 2-1/2 months.

While Brent traded higher than WTI due to relatively better supply/demand fundamentals, the higher gasoline crack was also supporting the London-traded Brent as U.S. traders eyed more imports of crude to be refined into gasoline.

WTI hit August lows on Wednesday, briefly falling below the $40 per barrel key psychological support, after an eighth straight week of builds in U.S. crude stockpiles that took inventories to above 487 million barrels, or just below April's record highs of nearly 491 million. [EIA/S]

Goldman Sachs (N:GS) said on Thursday there remained a downside risk to oil prices "as storage utilization continues to climb". The bank added that "we don't believe that current prices present an appealing entry point."

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"Ultimately the focus will return to the balance of demand relative to supply, and until inventory data provides evidence of a tighter supply, the path of least resistance will be lower," CMC Markets chief market analyst Michael Hewson said.