Despite last week’s drop in US inventories, oil prices continued to inch lower on Thursday, retreating from the multi-month highs reached during the previous session as investors booked profits and demanded prudence.
US West Texas Intermediate (WTI) crude futures CLc1 slid 44 cents, or 0.52pc, to $83.44 in trade thinned by the US Independence Day vacation, while Brent crude futures LCOc1 were down 40 cents, or 0.46 per cent, at $86.94 a barrel by 1105 GMT.
Brent increased by 1.3 percent to close at $87.34, its highest level since April 30. In contrast, WTI had reached an 11-week high of $83.88.
These profits came after US crude stock prices dropped more than anticipated. A drop of 12.2 million in inventories was reported by the US Energy Information Administration (EIA). A draw of 680,000 barrels was anticipated by analysts surveyed by Reuters.
Thursday’s price dip is not anticipated to endure, according to PVM analyst Tamas Varga, given the weakening currency and improved prognosis for US fuel consumption following the EIA data.
OANDA analyst Kelvin Wong stated that traders taking profits following recent increases is one reason for the oil prices’ Thursday morning decline.
But May saw a surprise decline in German industrial orders, adding to the indications that the continent’s largest economy is still struggling to recover.
US data revealed this week that although the number of unemployed people surged, so did the number of first-time applications for US unemployment benefits, raising concerns about demand.
Conversely, analysts said that poorer economic statistics would prompt the US Federal Reserve to lower interest rates sooner rather than later, which would be advantageous for the oil markets.
Markets have already increased the likelihood of a September rate decrease to 74 percent from 65 percent due to softer US data.
In a note to investors, Swiss bank UBS predicted that Brent crude will hit $90 per barrel this quarter, citing expected drops in oil stocks and production curbs by OPEC+.
