London — Oil steadied above $61 a barrel on Thursday as concern over the demand outlook offset a surprise drop in U.S. crude inventories and the prospect of further action by OPEC and its allies to support the market.
In the latest sign of economic weakness that has prompted lower oil demand projections, employment in Germany’s private sector fell fell for the first time in six years in October, a survey showed on Thursday.
Brent crude was unchanged at $61.17 a barrel at 1158 GMT, having risen 2.5% on Wednesday. U.S. West Texas Intermediate (WTI) crude was down 10 cents at $55.87.
“Oil may now be off its lows, but gains are very gradual and downward pressures, most notably as a result of the subdued global outlook, persist,” said Craig Erlam, analyst at broker OANDA.
Crude’s gains on Wednesday were supported by an unexpected drop in U.S. inventories.
The inventories fell 1.7 million barrels in the week ended Oct. 18, against analyst expectations of a 2.2 million barrel increase, data from the Energy Information Administration (EIA) showed.
“Yesterday’s sugar rush was provided by the EIA but economic considerations will likely take over the steering wheel soon,” oil broker PVM’s Tamas Varga said.
Brent prices have risen 13% this year, supported by a supply pact among the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Since January OPEC, Russia and other producers have implemented a deal to cut oil output by 1.2 million barrels per day (bpd) until March 2020 to support the market. The producers meet over Dec. 5-6 to review the policy.
Adding further price support, officials have said that extended supply curbs are an option to offset the weaker demand outlook for OPEC crude in 2020.
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