Oil pares U.S. stock-draw gains on weak demand outlook

By Koustav Samanta
SINGAPORE, Oct 24 (Reuters) - Oil prices dipped on Thursday
on lingering concerns about a weak demand outlook, after surging
more than 2% in the previous session on the back of a surprise
draw in U.S. crude stocks.
Brent crude futures LCOc1 fell 39 cents, or 0.6%, to
$60.78 a barrel by 0111 GMT. The international benchmark crude
rose 2.5% on Wednesday to settle at $61.17 a barrel, levels not
seen since Sept. 30.
West Texas Intermediate (WTI) crude futures CLc1 dropped
46 cents, or 0.8%, to $55.51 per barrel. U.S. crude closed 3.3%
higher in the previous session.
U.S. crude inventories fell 1.7 million barrels in the week
ended Oct. 18, compared with analysts' expectations for a 2.2
million barrel build, data from the Energy Information
Administration showed. This was in stark contrast with earlier inventory data
released by industry group the American Petroleum Institute
(API), which showed a build of 4.5 million barrels in U.S. crude
stocks. API/S
The EIA said the drawdown in weekly stocks came as
refineries hiked crude runs and oil imports fell, which prodded
a jump in both benchmark crude grades on Wednesday.
"Given the unexpected drawdown in this week's report, it is
perhaps unsurprising that the market reaction was positive,"
Kieran Clancy of Capital Economics said in a note.
"That said, with headwinds facing the U.S. and the global
economy likely to intensify in the months ahead, it probably
won't be long before a return of fears over the health of
demand."
Some market participants said a decline in U.S. product
inventories, as shown by the EIA data, could point to underlying
demand. EIA/S
"The EIA report may be an indication that oil demand is not
as bad as a current dreary run of global headline macro data
might suggest," said Stephen Innes, market strategist at
AxiTrader.
The prospects of deeper production cuts by the Organization
of the Petroleum Exporting Countries (OPEC) and its allies also
helped support the market.
Russian Energy Minister Alexander Novak, however, said on
Wednesday that no formal calls have been made yet to change the
current global oil supply deal. OPEC, Russia and other producers have since January
implemented a deal to cut oil output by 1.2 million barrels per
day (bpd) until March 2020 to support the market. The producers
will meet to review the policy on Dec. 5-6.