Oil falls back on profit-taking
US benchmark West Texas Intermediate (WTI) for delivery in July dipped 36 cents to $60.36 a barrel.
Brent North Sea crude for July reversed 45 cents to stand at $66.09 a barrel in London midday deals.
“Crude oil prices are retreating today, seemingly on profit-taking ahead of the long weekend,” said analyst Fawad Razaqzada at trading site Forex.com.
“This follows sharp gains on Thursday and a smaller rally the day before which was inspired by news of a third drawdown in US oil inventories in as many weeks.”
The world oil market experienced topsy-turvy trade this week, as traders tracked supply concerns.
Prices fell on Monday and Tuesday as the ongoing global supply glut and soft demand overshadowed the impact of geopolitical tensions in the crude-rich Middle East.
They rebounded sharply on Wednesday and Thursday after the US Department of Energy (DoE) revealed sliding US petroleum supplies and production.
WTI surged $1.74 and Brent jumped $1.51 on Thursday in a second day of sharp rallies.
The weekly DoE report stirred expectations of an easing in a supply glut that had sent prices tumbling in recent months.
US crude inventories fell for the third consecutive week, by 2.7 million barrels, much more than analysts expected.
Declining US reserves usually indicate healthy demand in the world’s top crude consumer.
“Now, the rally seems to have fizzled out probably due to profit-taking as the market re-adjusts,” said analyst Nicholas Teo at CMC Markets in Singapore.
“We never expected the US inventories numbers to fall that much and last night’s price rally is due to traders reacting to this drop,” he told AFP.
The report also showed US production falling 112,000 barrels a day to 9.26 million.
The fall in output has raised hopes of an easing in the build-up of global crude reserves, which was a key reason for the collapse in prices of more than 50 percent between June and January.
Daniel Ang, investment analyst at Phillip Futures in Singapore, said oil prices remain well supported due to a weaker dollar, as expectations of a US interest rate rise in the near-term dissipate.
Minutes from the US Federal Reserve’s April policy meeting released Wednesday showed board members are concerned the world’s biggest economy is not yet ready to absorb a rate hike from current record lows.
“With the expectation of interest rate hikes being pushed back, the US dollar strength would remain lower for an extended period of time,” Ang said.
A weaker US dollar makes dollar-priced oil cheaper for international investors and so tends to boost demand.
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