Brent crude fell
toward $61 per barrel on Thursday, after a sharp rally in the previous
session, as bulging U.S. crude stockpiles offset indications of a
recovery in demand.
Oil prices on both
sides of the Atlantic recorded their largest percentage gains in nearly
two weeks at Wednesday's settlement, boosted by improved views on global
oil demand from the Saudi oil minister and better-than-expected China
data.
"The previous gains reflected the fact that the market is looking forward to more production cuts coming with declines in rig counts," said Ric Spooner, chief analyst at CMC Markets in Sydney, referring to recent data showing a slide in U.S. oil drilling amid beaten-down crude prices.
"But
it is a conflict play between production and demand. Certainly,
production is exceeding demand, at least in the U.S.," Spooner added.
Brent crude LCOc1 had dropped 31 cents to $61.32 a barrel by 0544 GMT (12.44 a.m. EST), after jumping more than 5 percent on Wednesday. U.S. crude CLc1 was down 42 cents at $50.57, following a more than 3 percent gain in the previous session.
Prices
were hurt by data showing U.S. crude stocks rose 8.4 million barrels
last week to 434.1 million barrels, a seasonal record high for the
seventh straight week, as refineries trimmed output.
"With the continued refinery strikes as well as a strong production from the U.S., it comes as no surprise that inventories increase," Phillip Futures analysts said in a note on Thursday. "Without U.S. crude production making adjustments, we strongly believe that prices will not recover yet."
The largest U.S. refinery strike since 1980 continued with no movement toward renewed talks to end a walkout by 6,550 union workers at 15 plants, including 12 refineries accounting for one-fifth of domestic capacity.
U.S. crude, or the West Texas Intermediate (WTI), has risen 16 percent from an almost 6-year low of $43.58 hit last month, but prices are still down more than 50 percent from highs reached in June 2014 amid oversupply woes.
WTI's discount to Brent CL-LCO1=R widened to as much $11.01 in early trade on Thursday, close to the previous session's $11.03 - the widest in nearly 13 months.
"The previous gains reflected the fact that the market is looking forward to more production cuts coming with declines in rig counts," said Ric Spooner, chief analyst at CMC Markets in Sydney, referring to recent data showing a slide in U.S. oil drilling amid beaten-down crude prices.
Brent crude LCOc1 had dropped 31 cents to $61.32 a barrel by 0544 GMT (12.44 a.m. EST), after jumping more than 5 percent on Wednesday. U.S. crude CLc1 was down 42 cents at $50.57, following a more than 3 percent gain in the previous session.
"With the continued refinery strikes as well as a strong production from the U.S., it comes as no surprise that inventories increase," Phillip Futures analysts said in a note on Thursday. "Without U.S. crude production making adjustments, we strongly believe that prices will not recover yet."
The largest U.S. refinery strike since 1980 continued with no movement toward renewed talks to end a walkout by 6,550 union workers at 15 plants, including 12 refineries accounting for one-fifth of domestic capacity.
U.S. crude, or the West Texas Intermediate (WTI), has risen 16 percent from an almost 6-year low of $43.58 hit last month, but prices are still down more than 50 percent from highs reached in June 2014 amid oversupply woes.
WTI's discount to Brent CL-LCO1=R widened to as much $11.01 in early trade on Thursday, close to the previous session's $11.03 - the widest in nearly 13 months.
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