Oil prices steadied on Thursday as a drop in U.S. fuel inventories provided a floor, after four days of declines on investor concern over the global demand outlook.
Brent crude futures gained 29 cents, or 0.4%, to $76.34 a barrel by 1330 GMT. U.S. West Texas Intermediate crude futures rose 43 cents, or 0.6%, to $72.36.
“Crude oil prices have stabilised but continue to face downward pressure from ongoing macroeconomic factors. Concerns about China’s economic slowdown have weighed heavily on global demand,” said George Khoury, global head of education and research at CFI Financial Group.
Prices plunged on Wednesday as revisions to jobs data in the United States added to concerns about crude demand after weak economic data out of China last week.
The United States is the world’s biggest oil consumer and China is the world’s largest oil importer.
“The potential weakness in the U.S. economy coupled with a lacklustre recovery in China suggests oil demand growth is to be towards the lower end of expectations,” said Panmure Liberum analyst Ashley Kelty.
Underpinning prices, a U.S. government report on Wednesday showed U.S. crude, gasoline and distillate inventories fell in the week ending Aug. 16 while refinery runs increased.
The larger than expected draw in U.S. stocks limited losses, Kelty added.
Investors are also expecting that the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, may reconsider its plan to gradually unwind some output cuts in October.
OPEC+ has said the plan to raise output could be paused or reversed if needed.
“The downward pressure on prices makes it increasingly likely that OPEC+ will have to scrap their plans for gradually increasing supply from October. Failing to do so, will likely put further pressure on prices,” ING analysts said in a note.
Another supply side factor is easing concern over the Israel-Gaza war as the United States, Israel and Hamas try to hammer out a ceasefire deal, though U.S. diplomatic efforts this week ended without a truce.
(Reporting by Arunima Kumar in Bengaluru, Katya Golubkova in Tokyo and Trixie Yap in SingaporeEditing by David Goodman, Alex Lawler)
