WTI near $57 as smaller U.S. stockpile drop adds to economy woes

Oil declined as a smaller-than-expected draw in U.S. inventories added bearish sentiment to a market already reeling from gloomy economic news.

Futures lost 0.4% in New York, after earlier slumping 1.5%.

While American crude and gasoline stockpiles both fell for a third week, they dropped less than forecast in a Bloomberg survey.

Anxieties over demand resurfaced earlier this week following a slew of sluggish economic indicators from the U.S., China and Europe, even as the Organization of Petroleum Exporting Countries and its allies agreed to extend output cuts into 2020.

Oil is down for the week after plunging 4.8% on Tuesday, its worst decline on the day of an OPEC meeting in more than four years. While the group’s Secretary-General Mohammad Barkindo described the drop as an “anomaly,” Bank of England Governor Mark Carney warned of dangers from rising protectionism around the world and said there could be a “widespread slowdown” that may require a major economic-policy response.

“The OPEC deal was more or less what the market deemed to be necessary,” said Ole Sloth Hansen, head of commodities strategy at Saxo Bank A/S. “The weakness in U.S. and Chinese data early in the week, together with yesterday’s smaller-than-expected draw, only added to demand worries.”

West Texas Intermediate oil for August delivery declined 23 cents, or 0.4%, to $57.11 a barrel on the New York Mercantile Exchange as of 8:40 a.m. local time. The contract gained $1.09 on Wednesday, recovering some ground after slumping the most since May 31 in the previous session.

Brent for September settlement slipped 4 cents to $63.78 a barrel on the ICE Futures Europe Exchange, after adding 2.3% on Wednesday. The benchmark global crude traded at a premium of $6.58 to WTI for the same month.

U.S. crude inventories shrank by 1.09 million barrels last week, according to the Energy Information Administration. The Bloomberg survey had predicted a loss of 3 million barrels. Gasoline stockpiles fell by 1.58 million barrels, compared with a forecast for a 2.4 million-barrel loss.

U.S. oil production also remains near a record-high. Output increased to 12.2 million barrels a day last week, resuming gains after dropping since the start of June, the EIA said. Crude exports from the country fell back to below 3 million barrels a day.

© 2019 Bloomberg L.P.

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