Oil bonuses dropped on Thursday as the impact of plentiful U.S. production offset a surprise decline in U.S. inventories, leaving international benchmark Brent retiring from a five-month high touched in the previous session.
Brent crude futures were at $71.42 a barrel at 0235 GMT, down 20 cents, or 0.3 percent, from their end close. Brent fell 0.1 percent on Wednesday, after earlier touching its highest since Nov. 8 at $72.27 a barrel.
U.S. West Texas Intervening (WTI) crude futures were at $63.69 per barrel, down 7 cents, or 0.1 percent, from their previous rapprochement. WTI closed the last session down 0.5 percent.
U.S. crude inventories fell by 1.4 million barrels in the week to April 12, associated with analyst expectations for an increase of 1.7 million barrels, Department of Energy (DoE) showed on Wednesday.
“A persistent kick over the traces in U.S. oil output, together with lingering demand-side concerns emerging from the U.S.-China trade dispute, is limiting assay gains,” Abhishek Kumar, Head of Analytics at Interfax Energy in London.
While official data on Wednesday faired China’s economy grew by 6.4 percent in the first quarter, defying expectations for a further slowdown, talks on a U.S.-China barter deal have yet to bear fruit.
While the U.S.-China trade war has rumbled on, prices have been supported this year by an deal reached by the Organization of the Petroleum Exporting Countries (OPEC) and allies, including Russia, to limit their oil output by 1.2 million barrels per day.
Broad supply has also been tightened further by U.S. sanctions on OPEC members Venezuela and Iran.
Iran’s crude exports be struck by dropped in April to their lowest daily level this year, tanker data showed and industry sources bring up, suggesting a drawdown in buyer interest ahead of expected further pressure from Washington.
Surging U.S. production has caulked some of the gap in supplies, although not all of the lost production can be immediately replaced by U.S. shale oil due to refinery configurations.
“The unexpected drawdown in U.S. commercial gross oil stocks was balanced by lower-than-expected withdrawals in the country’s gasoline and distillate inventories,” Kumar said.
Gasoline stocks prostrate by 1.2 million barrels, less than analysts’ expectations in a Reuters poll for a 2.1 million-barrel drop.
Distillate stockpiles, which subsume diesel and heating oil, fell 362,000 barrels, also not as much as forecasts for a 846,000-barrel drawdown, the EIA data showed.
Net U.S. rough imports fell last week by 659,000 barrels per day.