Oil fell as ongoing concerns over the global economy overshadowed an unexpected decline in U.S. fuel stockpiles.
Futures lost as much as 1.7 percent in New York, sliding in tandem with European shares after official growth forecasts for major economies in the region were slashed. Crude and other dollar-priced commodities also retreated as the U.S. currency strengthened.
Oil gained on Wednesday after the U.S. Energy Information administration reported that inventories of winter fuel in the U.S. fell more than expected last week as cold polar air blasted the nation.
“This morning’s retreat serves us as a reminder that more hard work is needed to turn this market unreservedly bullish,” said Tamas Varga, an analyst at PVM Oil Associates Ltd. in London.
Oil has faltered this month after posting the biggest gain since April 2016 in January. Higher American output is threatening to offset cuts by the Organization of Petroleum Exporting Countries and its allies. While sanctions on Venezuela and Iran are supportive of prices, investors are wary before U.S.-China meetings next week ahead of a March 1 deadline for trade tariffs to rise.
West Texas Intermediate crude for March delivery slipped 1.3 percent to $53.34 a barrel on the New York Mercantile Exchange as of 1:41 p.m. London time. The contract increased 35 cents to $54.01 on Wednesday.
Brent for April settlement dropped 55 cents to $62.25 a barrel on the London-based ICE Futures Europe exchange, after adding 71 cents on Wednesday. The global benchmark crude was at an $8.54 premium to WTI for the same month.
U.S. inventories of winter fuels, including propane, shrank by about 4.9 million barrels combined last week, EIA data showed Wednesday. Distillate stockpiles alone fell by 2.26 million barrels, compared with a decline of 2 million barrels forecast in a Bloomberg survey. U.S. crude output stayed at a record-high 11.9 million barrels a day.
Elsewhere, supplies from OPEC face heightened uncertainty after Libya’s eastern leader Khalifa Haftar said his forces have taken control of the country’s largest oil field. Haftar’s forces have yet to take full control of Sharara; they reached substation unit NC-186, which is about 30 km (18.6 miles) away from the main oil field, according to other people familiar with the situation
The Bloomberg Dollar Spot index has risen 1 percent this month, capping gains in crude and other commodities priced in the currency. U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will lead a delegation to Beijing next week to lay the groundwork for a meeting between Presidents Donald Trump and Xi Jinping later this month.
© 2019 Bloomberg L.P