LONDON -Oil prices for Brent crude held above $87 a barrel on Thursday, near their highest level since late April after data the previous day showed a decline in U.S. inventories.
Brent crude futures were down 29 cents, or 0.3%, at $87.05 a barrel by 1323 GMT. U.S. West Texas Intermediate (WTI) crude futures fell 40 cents, or 0.5%, to $83.48 in trade thinned by the U.S. Independence Day holiday.
In the previous session, Brent gained 1.3% to settle at $87.34 for its highest close since April 30. WTI, meanwhile, had settled at an 11-week high of $83.88.
Those gains followed a larger than expected decline in U.S. crude stocks. The U.S. Energy Information Administration (EIA) reported a 12.2 million draw in inventories. Analysts polled by Reuters had expected a draw of 680,000 barrels.[EIA/S]
Oil prices had earlier dropped by as much as 83 cents, but the dip was expected not to last given dollar weakness and a brighter outlook for U.S. fuel demand after the EIA data, said PVM analyst Tamas Varga. However, German industrial orders fell unexpectedly in May, adding to signs that a recovery for Europe’s largest economy remains elusive. Demand concerns were heightened by U.S. data on Wednesday showing that first-time applications for U.S. unemployment benefits increased last week while jobless numbers also rose. Countering that, weaker economic data could hasten interest rate cuts by the U.S. Federal Reserve, analysts said, which could be supportive for oil markets.
Softer U.S. data has already prompted markets to lift the probability of a September rate cut to 74% from 65%.
Swiss bank UBS expects Brent crude to reach $90 a barrel this quarter, it said in a note to clients, citing OPEC+ production cuts and projected declines in oil inventories.