Oil drops after OPEC predicts weaker demand but US inventory data limits decline
Picture used for illustrative purpose. File
Crude oil prices fell on Thursday after OPEC said it expected demand to drop more than expected, although data showing a decline in US inventories lent support.
Brent crude was down 26 cents or 0.6% at $45.17 a barrel by 0647 GMT, after a gain of around 2% in the previous session. West Texas Intermediate oil also lost 0.6%, a 25 cent decline to $42.42 a barrel which followed a climb of 2.6% on Wednesday.
The Organization of the Petroleum Exporting Countries said in a monthly report that world oil demand will fall by 9.06 million barrels per day this year, more than the 8.95 million bpd decline expected a month ago.
"OPEC released a bearish monthly forecast which indicated that world oil demand will fall more steeply in 2020 than previously forecasted due to the coronavirus and there are doubts about next year's recovery," said Avtar Sandu, senior manager commodities at Phillip Futures.
US crude oil, gasoline and distillate inventories dropped last week, however, as refiners ramped up production and demand improved, a government report showed.
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Crude inventories fell by 4.5 million barrels, compared with analysts' expectations in a Reuters poll for a 2.9 million-barrel drop, data from the Energy Information Administration showed.
US fuel demand rose to 19.37 million barrels per day last week, the highest since March while crude output dropped to 10.7 million barrels per day from 11 million bpd.
The EIA's downward revision on Tuesday to a key U.S. oil production forecast for this year is also helping support prices.
US crude production is forecast to slide by 990,000 bpd this year to 11.26 million bpd, steeper than the 600,000 bpd decline it forecast last month.
Increasing uncertainty over a stalemate in Washington on a stimulus package to support recovery from the coronavirus pandemic may also weigh on prices, analysts said.
Reuters
