Oil prices fall a signs of slowing US demand, economic concerns

US crude inventories dropped by 1.1 million barrels last week, the Energy Information Administration said. (Reuters)

• US crude inventories dropped by 1.1 million barrels last week, the Energy Information Administration said
• The weak US data followed a report of slow business growth in Europe last month as well

SYDNEY: Oil prices fell more than 0.5 percent on Thursday, weighed down by data showing a smaller-than-expected decline in US crude stockpiles and worries about the global economy.
Front-month Brent crude futures, the international benchmark for oil prices, were down 1 percent at $63.21 per barrel by 0538 GMT. Brent closed up 2.3 percent on Wednesday.
US West Texas Intermediate (WTI) crude futures were down 1 percent at $56.78 per barrel. WTI closed up 1.9 percent on Wednesday.
US crude inventories dropped by 1.1 million barrels last week, the Energy Information Administration (EIA) said on Wednesday. That compared with analyst expectations for a decrease of 3 million barrels.
Inventories fell less than expected as US refineries last week consumed less crude than the week before and processed 2 percent less oil than a year ago, the EIA data showed, despite being in the midst of the summer gasoline demand season.
That suggests oil demand in the United States, the world’s biggest crude consumer, could be slowing amid signs of a weakening economy. New orders for US factory goods fell for a second straight month in May, government data showed on Wednesday, adding to the economic concerns.
The weak US data followed a report of slow business growth in Europe last month as well.
“Tossing aside the short-term nature of fluctuations around the inventory data, it’s impossible to escape the economic reality that we are in the midst of a global manufacturing downturn,” said Stephen Innes, managing partner, Vanguard Markets.
The weakness in oil was offset slightly by the outlook for global supplies.
US energy firms this week reduced the number of oil rigs operating for the first time in three weeks as drillers follow through on plans to cut spending this year.
Drillers cut five oil rigs in the week to July 3, bringing the total count down to 788, General Electric Co’s Baker Hughes energy services firm said in its closely followed report on Wednesday.
Global supply is also expected to contract as the Organization of the Petroleum Exporting Countries (OPEC) and other producers such as Russia, a group known as OPEC+, agreed on Tuesday to extend oil production cuts until March 2020.