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.
Oil prices dipped on Thursday on lingering concerns about a weak demand outlook, after surging more than 2% in the previous session on the back of a surprise draw in U.S. crude stocks.
Brent crude futures fell 39 cents, or 0.6%, to $60.78 a barrel by 0111 GMT. The international benchmark crude rose 2.5% on Wednesday to settle at $61.17 a barrel, levels not seen since Sept. 30.
West Texas Intermediate (WTI) crude futures dropped 46 cents, or 0.8%, to $55.51 per barrel. U.S. crude closed 3.3% higher in the previous session.
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.
This was in stark contrast with earlier inventory data released by industry group the American Petroleum Institute (API), which showed a build of 4.5 million barrels in U.S. crude stocks.
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.
“Given the unexpected drawdown in this week’s report, it is perhaps unsurprising that the market reaction was positive,” Kieran Clancy of Capital Economics said in a note.
“That said, with headwinds facing the U.S. and the global economy likely to intensify in the months ahead, it probably won’t be long before a return of fears over the health of demand.”
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 prospects of deeper production cuts by the Organization of the Petroleum Exporting Countries (OPEC) and its allies also helped support the market.
Russian Energy Minister Alexander Novak, however, said on Wednesday that no formal calls have been made yet to change the current global oil supply deal.
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.