Oil prices fell on Thursday after rising in the previous session due to a larger-than-expected drop in U.S. gasoline inventories, as markets balanced macroeconomic concerns with expectations of strong near-term demand.
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Brent crude futures fell by 3 cents to $70.92 per barrel at 07:04 GMT, while U.S. West Texas Intermediate (WTI) crude futures dropped by 8 cents to $67.60 per barrel.
Both benchmarks had risen about 2% on Wednesday after U.S. government data showed a larger-than-expected decline in oil and fuel inventories.
U.S. gasoline inventories dropped by 5.7 million barrels, a bigger drop than analysts’ expectations of a 1.9 million barrel decline. Distillate stocks also fell more than expected, despite an increase in crude oil inventories.
Hiroyuki Kikukawa, Chief Strategist at Nissan Securities, said, "The drop in U.S. gasoline inventories boosted expectations of a seasonal rise in demand during the spring, but concerns over the global economic impact of trade wars have weighed on the market."
He added, "With both bullish and bearish factors at play, it has become difficult for the market to clearly trend in any direction."
In related news, U.S. President Donald Trump threatened on Wednesday to escalate the global trade war by imposing more tariffs on European goods, while major U.S. trading partners confirmed they would retaliate against the trade barriers imposed by the American president.
Trump’s trade policy has raised concerns among investors and consumers, affecting business confidence and increasing fears of an economic recession in the U.S.
On the other hand, the Organization of the Petroleum Exporting Countries (OPEC) announced on Wednesday that Kazakhstan led a significant increase in crude oil production in February among the OPEC+ group, posing a challenge to the group in enforcing compliance with agreed production targets.
Concerns over reduced demand for jet fuel have also affected markets, with analysts at JPMorgan noting that data from the U.S. Transportation Security Administration showed a 5% drop in passenger traffic in March compared to the previous year, following a slowdown in travel during February.
However, strong global oil demand numbers helped offset the overall market weakness.
Analysts stated, "As of March 11, global oil demand averaged 102.2 million barrels per day, an increase of 1.7 million barrels per day compared to the previous year, exceeding our forecast for the month by 60,000 barrels per day." - Agencies
