Oil snaps four-day rally; glut back in focus with U.S. crude builds

NEW YORK (Reuters) - Oil cut short a four-day rally on Wednesday, with investors and traders focusing again on the supply glut in the market after U.S. crude stocks set record highs.

A rebound in the dollar also weighed on crude prices because it makes commodities denominated in that currency more costly.

U.S. crude shaved off more than a quarter of the nearly 20 percent gain it had made since Thursday's close, slumping more than 5 percent, or $2.80 a barrel, to $50.25 by 11:20 a.m. EST. At one point, it almost broke below $50.

Brent oil lost about 3 percent, or $1.80, to $56.11 after a session low at $55.41.

U.S. crude stocks jumped by 6.3 million barrels last week to 413.06 million, their highest since records began in 1982, the government-run Energy Information Administration reported. Traders and investors had expected a build of just about 3.5 million barrels for the week ended Jan. 30.

Oil's $9 climb since Thursday had raised speculation that the market's seven-month rout might be near an end.

But the EIA data reignited worries about the global oil glut that sparked the selloff, which erased about 60 percent off crude prices between June and January.

"If the market was looking for something to try and extend the four-day rally, it was certainly not" in the EIA data, said Sal Umek, senior associate at the Energy Management Institute in New York.

(Additional reporting by Himanshu Ojha in London and Jacob Gronholdt-Pedersen in Singapore; Editing by William Hardy and Lisa Von Ahn)

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