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Oil dips as US refineries slowdown stirs demand worries
[NEW YORK] Global oil prices dipped on Wednesday despite a much bigger-than-expected decline in US crude inventories, as a slowdown at refineries raised concerns about the strength of demand.
US benchmark West Texas Intermediate for delivery in June dipped 25 cents to finish at US$60.50 a barrel on the New York Mercantile Exchange.
Brent North Sea crude for June, a global benchmark, closed at US$66.81 a barrel, down five cents from Tuesday's settlement.
Prices had surged Tuesday, getting a boost from a weaker greenback that makes dollar-priced oil cheaper for holders of rival currencies.
That helped to extend gains earlier Wednesday, as weak US April retail sales data weighed on the dollar. But it was not enough to keep the futures contracts in positive territory as traders weighed the US Department of Energy's weekly petroleum report.
The DoE said crude stockpiles declined by 2.2 million barrels in the week ending May 8, to 484.8 million barrels, the highest level for this time of year in at least the last 80 years.
It was the second consecutive week of declines after four uninterrupted months of increasing stockpiles, and much larger than the 250,000-barrel decrease expected by analysts.
US crude oil production, meanwhile, rose by 5,000 barrels per day over the week to 9.374 million barrels per day.
Attention zeroed in on an unexpected slowdown at refineries, operating at 91.2 per cent of capacity compared with 93.0 per cent the prior week, despite the approach of the US summer vacation driving season at the end of May.
"That's turned out to be the dominant theme," said Bob Yawger of Mizuho Securities USA.
"They don't believe that there's much demand there, even though we're just days away from Memorial Day weekend," Mr Yawger said.
The International Energy Agency, in its closely watched monthly oil market report, said Wednesday that Opec crude supply had climbed in April as Iraq and Iran boosted output and the cartel's kingpin, Saudi Arabia, had kept flows above 10 million barrels per day.
The 12-member Organisation of the Petroleum Exporting Countries, which provides about 30 per cent of global crude, raised output to 31.2 million barrels per day, above its 30 mbd quota.
Oil prices have dropped about 45 per cent since June on high US supplies, weak global economic growth and the decision of Opec last November to keep maintain its quota despite falling prices.