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Oil prices ease on weak demand outlook
OIL prices slipped on Thursday amid persistent concerns about a weak demand outlook, after posting sharp gains in the previous session following a surprise crude inventory drawdown in the United States.
Brent crude futures fell 17 cents, or 0.3 per cent, to US$61 a barrel by 0620 GMT. The international benchmark crude rose 2.5 per cent on Wednesday to settle at US$61.17 a barrel, levels not seen since Sept 30.
West Texas Intermediate (WTI) crude futures dropped 32 cents, or 0.6 per cent, to US$55.65 per barrel. US crude closed 3.3 per cent 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.
US 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 (EIA) 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 US 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 US 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.
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. REUTERS