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Oil prices fall on US inventory data, concerns about demand
[CALGARY] Oil prices fell in thin trade on Thursday, weighed down by data showing a smaller-than-expected draw on US crude stockpiles and worries about the global economy.
Front-month Brent crude futures, the international benchmark for oil prices, settled down 52 cents or 0.81 per cent at US$63.30 per barrel. Brent closed up 2.3 per cent on Wednesday.
US West Texas Intermediate (WTI) crude futures were down 54 cents or 0.94 per cent at US$56.89 per barrel. WTI closed up 1.9 per cent on Wednesday.
Trading volumes were light due to the July 4 holiday in the United States.
Markets appeared largely unmoved by the detention by British Royal Marines of a supertanker in Gibraltar possibly carrying Iranian crude oil bound for Syria, as tensions between Iran and the United States have flared over mysterious attacks on tankers in the Gulf of Oman in recent months.
The US Energy Information Administration on Wednesday reported a weekly decline of 1.1 million barrels in crude stocks, much smaller than the 5 million barrel draw reported by the American Petroleum Institute earlier in the week.
"The inventory data by no means argue in favour of higher prices: not only did the crude oil inventory reduction prove smaller than expected – it also fell noticeably short of that reported by the API the day before," Commerzbank wrote in a note to clients.
US inventories fell less than expected as US refineries last week consumed less crude than the week before and processed 2 per cent less oil than a year ago, the EIA data showed, despite being in the midst of the summer petrol demand season.
That suggests oil demand in the United States, the world's biggest crude consumer, could be slowing amid signs of a weakening economy. New orders for US factory goods fell for a second straight month in May, government data showed on Wednesday, adding to the economic concerns.
The weak US data followed a report of slow business growth in Europe last month as well.
"Tossing aside the short-term nature of fluctuations around the inventory data, it's impossible to escape the economic reality that we are in the midst of a global manufacturing downturn," said Stephen Innes, managing partner, Vanguard Markets.
Uncertainty over demand, however, was offset slightly by the outlook for global supply.
Output will stay limited as the Organization of the Petroleum Exporting Countries and other producers such as Russia, a group known as Opec+, agreed on Tuesday to extend oil production cuts until March 2020.