Oil prices slipped on Thursday as persistent concerns about a weak demand outlook weigh on, after posting sharp gains in the previous session following unexpected crude inventory drawdown in the United States.
Brent crude futures LCOc1 fell 17 cents, or 0.3 percent, to $61 a barrel by 0620 GMT. The international benchmark crude grew 2.5 percent on Wednesday to settle at $61.17 a barrel, levels not seen since September 30.
West Texas Intermediate (WTI) crude futures CLc1 inched down by 32 cents, or 0.6 percent, to $55.65 per barrel. U.S. crude closed 3.3 percent higher in the previous session.
“Oil prices are likely to remain subdued in the near term as the global economy continues to slow and risk aversion prevails,” Caroline Bain, chief commodities economist at Capital Economics said in a note.
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.
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.
“A surprise fall in both official U.S. crude inventories and gasoline stocks was supportive for oil overnight,” said Jeffrey Halley, senior market analyst at OANDA.
But “with the supply side of the global oil equation still ascendant, rallies are likely to be limited and short-term in nature,” he added.
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 prospect of deeper production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies also helped to cap a deeper slide in oil prices on Thursday.
“Oil prices, though supported by supply curtailment policies and talk of further production cuts by OPEC+, have struggled to extend bullish gains over downbeat global economic projections in the current term,” said Benjamin Lu, analyst at Singapore-based brokerage Phillip Futures.
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 December 5-6.