14 May 2015 – Oil slipped on Thursday as weak data from the world’s top economies raised concern about the outlook for global fuel demand, offsetting data that showed a large drawdown in US crude stockpiles last week.
China, the world’s top energy consumer, saw its economy losing more steam in April despite easier monetary policy, while Europe’s largest economy, Germany, slowed in the first quarter.
In the US, retail sales were flat in April, dampening hopes of a sharp rebound in growth in the second quarter.
“We’ve had a round of very weak data in the last 24 hours and that’s offset the strength that we would normally expect to come through from a larger than expected draw in US inventories,” said Michael McCarthy, chief strategist at CMC Markets in Sydney.
June Brent crude fell 22 cents to $66.59 a barrel in early trading after settling 5 cents lower in the previous session. US crude for June delivery dropped 32 cents to $60.18 after ending 25 cents down in a volatile session on Wednesday.
Crude stocks in the US fell for the second week, by 2.2 million barrels, following four months of steady gains, even though refiners pared back record seasonal run rates and imports jumped. Analysts had expected crude inventories to rise by 386,000 barrels.
Despite the drop, inventories were still almost 90 million barrels higher than this time last year. A surprise increase in output in the second largest US oil-producing state, North Dakota, in March also added to supply concerns.
“I won’t be surprised to see a pullback in West Texas, say to around $56 to $58 levels, before it moves higher, but there’s quite clearly an uptrend in place now,” McCarthy said.
Oil has rallied in the past month on forecasts of lower US output and as lower prices have boosted stockpiling across Asia.
The approach of peak summer demand and a hurricane season in the US that could disrupt supply also point to higher prices, McCarthy said. “I think we’re going to see a test of $70 for West Texas at some stage in the next 30 days,” he said.