Oil. Picture: REUTERS
Oil. Picture: REUTERS

London — Oil prices fell on Thursday, weighed down by data showing a smaller-than-expected draw on US crude stockpiles and worries about the global economy.

Front-month Brent crude futures, the international benchmark for oil prices, were down 49 US cents or 0.77% at $63.33 per barrel by 8.30am GMT. Brent closed up 2.3% on Wednesday.

US West Texas Intermediate (WTI) crude futures were down 47c or 0.82% at $56.87 per barrel. WTI closed up 1.9% on Wednesday.

Markets appeared unmoved by the detention in Gibraltar by British Royal Marines of a supertanker possibly carrying Iranian crude oil bound for Syria, as tensions between Iran and the US have flared over mysterious attacks on tankers in the Gulf of Oman in recent months.

"Gains were capped by the Energy Information Administration (EIA) reporting a weekly decline of 1.1-million barrels in crude stocks, versus the three-million barrels forecast by analysts and five-million barrels reported by the API a day earlier," Cantor Fitzgerald Europe said.

"Also providing headwinds were signs of a recovery in oil exports from Venezuela in June and growth in Argentinian output in May," it added.

US inventories fell less than expected as US refineries last week consumed less crude than the week before and processed 2% less oil than a year ago, the EIA data showed, despite being in the midst of the summer petrol demand season.

That suggests oil demand in the US, 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 at Vanguard Markets.

The weakness in oil was offset slightly by the broader 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 in 2019.

Drillers cut five oil rigs in the week to July 3, bringing the total count down to 788, General Electric's Baker Hughes energy services firm said in its closely followed report on Wednesday..

Global supply is also expected to contract as Opec and other producers such as Russia, a group known as Opec+, agreed on Tuesday to extend oil production cuts until March 2020.

Reuters