SINGAPORE (Reuters) – Oil prices dipped on Thursday after sharp gains in the previous session following a surprise draw in U.S. crude inventories, with concerns over a weak demand outlook adding to downward pressure.
FILE PHOTO: Pumpjacks are seen during sunset at the Daqing oil field in Heilongjiang province, China August 22, 2019. REUTERS/Stringer
Brent crude futures LCOc1 fell 33 cents, or 0.5%, to $60.84 a barrel by 0335 GMT. The international benchmark crude rose 2.5% on Wednesday to settle at $61.17 a barrel, levels not seen since Sept. 30.
West Texas Intermediate (WTI) crude futures CLc1 dropped 44 cents, or 0.8%, to $55.53 per barrel. U.S. crude closed 3.3% higher in the previous session.
“Oil is seeing profit-taking in Asia after last night’s sharp up-move,” said Jeffrey Halley, senior market analyst at OANDA.
U.S. crude inventories fell 1.7 million barrels in the week ended Oct. 18, compared with analysts’ expectations for a 2.2 million barrel build, data from the Energy Information Administration showed.
This was in stark contrast with earlier inventory data released by industry group the American Petroleum Institute (API), which showed a build of 4.5 million barrels in U.S. crude stocks.
The EIA said the drawdown in weekly stocks came as refineries hiked crude runs and oil imports fell, which prodded a jump in both benchmark crude grades on Wednesday.
But persistent concerns about weak demand outlook continue to weigh on market sentiment, traders said.
“Flagging global economic growth and rising downside risks have kept global risk appetites measured as traders deliberate weaker fuel demand for the coming term,” said Benjamin Lu, analyst at Singapore-based brokerage Phillip Futures.
Some market participants said a decline in U.S. product inventories, as shown by the EIA data, could point to underlying demand.
“The EIA report may be an indication that oil demand is not as bad as a current dreary run of global headline macro data might suggest,” said Stephen Innes, market strategist at AxiTrader.
The prospects of deeper production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies also helped to support the market.
Russian Energy Minister Alexander Novak, however, said on Wednesday that no formal calls have been made yet to change the current global oil supply deal.
OPEC, Russia and other producers have since January implemented a deal to cut oil output by 1.2 million barrels per day (bpd) until March 2020 to support the market. The producers will meet to review the policy on Dec. 5-6.
Reporting by Koustav Samanta; editing by Richard Pullin