By Timothy Puko and Georgi Kantchev 

U.S. oil prices turned lower Thursday on concerns about massive supplies.

Front-month West Texas Intermediate futures traded down 65 cents, or 1.5%, to $43.80 a barrel on the New York Mercantile Exchange.

Brent crude for March delivery traded up 6 cents, or 0.1%, at $48.53 a barrel on London's ICE Futures exchange.

The U.S. benchmark had posted small gains in early trade Thursday, as investors who had bet on falling prices took profits from Wednesday's drop to a nearly six-year low. U.S. prices slid after government data showed crude stockpiles grew to their highest level in at least 80 years.

The slide resumed around midmorning Thursday. Oil prices are off close to 60% since a peak in June.

"When you lop off 60% in six months, further declines are going to be really hard to come by," said Gene McGillian, an analyst at Tradition Energy. "I don't think it's a bottom yet, but we're approaching it."

Also Thursday, the U.S. government reported that unemployment benefits in late January fell to their lowest level in 14 years, potentially a good sign for demand, Mr. McGillian said. And there is still some concern about the escalating conflict in Libya curtailing oil supply there. But these small signs weren't supportive of any serious turnaround, Mr. McGillian and others said.

"What is really shocking is that U.S. production still continues to increase despite low crude-oil prices," Phillip Futures analysts said. "Without a drop in U.S. crude production, it is going to be an uphill battle for oil bulls."

The surge in U.S. production has been driven by the booming shale-oil industry taking advantage of technologies such as horizontal drilling and hydraulic fracturing to unlock new oil and gas reserves.

Norbert Rucker, head of commodity research at Julius Baer, said that as drilling in the U.S. shale-oil industry has been "dropping like a stone" since December and there is usually a four-month lag between this affecting production growth, a flattening of U.S. output should be expected soon.

This would drive a rebound in prices, but the "new normal" will be lower than in recent years at about $65 a barrel, Mr. Rucker said, citing advances in technology that have deflated production costs.

"We also know now there is a lot more oil in the ground," he said.

Write to Timothy Puko at tim.puko@wsj.com and Georgi Kantchev at georgi.kantchev@wsj.com

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