U.S. crude oil prices recovered to trade roughly flat on Thursday, after falling to levels that put the commodity on track for its lowest close in more than six months.
The West Texas Intermediate crude contract for July delivery dropped about 1 percent to a session low of $45.20 a barrel, below its close of $45.23 on Nov. 29, the day before OPEC agreed to cut output to support the market.
The price moved more firmly above this key line of support, recovering some of its losses to trade back above $46 a barrel in mid-morning trade. WTI was at $45.88 as of 12:53 p.m. EDT.
Prices could dip further and test $44 a barrel, but downside risk from current levels is limited, said Matt Smith, director of commodity research at tanker-tracking firm ClipperData.
“I think we get too much buying interest coming in because there’s demand coming through,” he told CNBC’s “Squawk Box” on Thursday.
Some analysts had been watching the $43.76 level, where WTI traded on an intraday basis on May 5 during a minor flash crash.
Falling below that level could cause prices to drop to the November low of $42.20, John Kilduff, founding partner at energy hedge Again Capital, had warned on Wednesday.
Despite the rebound in oil prices, Kilduff said prices need to rise significantly higher to post a close that would signal oil bulls are in control of the market.
“Bulls need $46 to have a pulse, and $47.10 or higher to get back in the game,” he said on Thursday.
Thursday’s drop extended losses after a 5.1 percent plunge in the previous session, sparked by a bearish report on U.S. stockpiles of crude and gasoline stockpiles from the Energy Information Administration.
Oil stockpiles in the United States surged by 3.3 million barrels in the week ended June 2, the EIA said Wednesday, confounding analysts’ estimates for a 3.5 million-barrel decline.
The report also showed a decline in gasoline demand, despite the onset of the summer driving season following the Memorial Day holiday.
Crude futures came under additional pressure on Thursday from signs of rising output in Libya and Nigeria, two OPEC members exempt from production cuts.