Oil fell amid growing concerns of an economic slowdown, yet remained on track for a third weekly increase as OPEC presses on with supply cutbacks.
Futures retreated as much as 1.1 percent in New York as German 10-year bond yields dropped below zero for the first time in two years, highlighting fears of a slowdown in the region, while a stronger U.S. dollar dimmed the appeal of commodities. Prices are still up 1.6 percent this week as U.S. government data showed an unexpected 9.59 million-barrel withdrawal in nationwide inventories last week, while OPEC and its allies reaffirmed plans to restrict supply.
Crude’s holding on to its rally after hitting a new high for the year this week. The Organization of Petroleum Exporting Countries and its allies continued to show their commitment to bring the market into balance in the face of surging American shale production. While disruptions in Venezuela and Iran have also squeezed supplies, uncertainty surrounding ongoing trade talks between the U.S. and China is keeping investors wary.
“Thanks to the OPEC+ production cuts, involuntary production outages in Venezuela and Iran, and the sharp decline in U.S. oil stocks, oil prices are facing their third consecutive weekly gain,” said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt.
West Texas Intermediate for May delivery was at $59.44 a barrel, down 51 cents, on the New York Mercantile Exchange at 10:50 a.m. in London. WTI climbed above $60 a barrel on Wednesday for the first time since November.
Brent for May settlement fell 71 cents to $67.15 a barrel on the London-based ICE Futures Europe exchange. It lost 0.9 percent on Thursday, dropping for the first time in four days. Prices are little changed this week. The global benchmark crude was at a premium of $7.76 to WTI.
The U.S. Energy Information Administration showed crude stockpiles dropped to 439.5 million barrels last week, defying analysts’ forecasts for a 1.75 million-barrel increase. However, they are above the five-year average of 432 million barrels for this time of the year, suggesting growing shale output still risks undermining OPEC and its partners’ efforts to cap production.
America’s oil exports climbed to 3.39 million barrels a day, the second highest weekly rate on record since 1993, while imports from the world’s top crude supplier, Saudi Arabia, decreased by more than half and its shipments from Venezuela stopped altogether.
Saudi Arabian Energy Minister Khalid Al-Falih said OPEC+ remains committed to curbing output when the Joint Ministerial Monitoring Committee met on Monday. Still, Russia and Iraq, the coalition’s other major suppliers, suggested the group should monitor the market until May or June before making a decision on extending the cuts through the year as developments in Venezuela and Iran may influence supply.
Other oil-market news: OPEC’s oil shipments are seen increasing to 24.09 million barrels a day in the four weeks to April 6, according to data from tanker tracker Oil Movements. A top Interior Department official told oil industry leaders the Trump administration is seeking to sign contracts leasing new coastal waters for oil drilling under favourable terms that will be difficult for future presidents to revoke or rewrite.