Oil prices rose early on Thursday, extending gains from the previous session following a large draw on USA gasoline inventories.
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According to Oil Price, crude traders have boosted their short positions for West Texas Intermediate by the largest volume since data tracking began ten years ago.
Brent crude fell 34 cents, or 0.8 percent, to settle at $41.80, after touching a session high at $43.18.
That price represents a tumble of more than 20 per cent from its recent peak above $50 a barrel in June.
Weaker demand from refineries, which process oil to create products such as petrol, are also expected to weigh on prices.
There may be indications of a pick-up in demand to help ease supply.
The dollar hit a six-week low, propping oil initially, before US stocks fell to a three-week trough, mitigating the rebound.
A Wall Street Journal survey of analysts showed the EIA was expected to report that crude stocks declined by 900,000 barrels.
EIA also said that movements of crude oil by rail within the U.S. averaged at 443,000 barrels per day in the first five months of this year, approximately 45% down from the same period last year.
Oil rallied from 12-year lows of $26-$27 in the first quarter to nearly $53 in June, boosted initially by expectations, later dashed, that OPEC would freeze output and later by supply outages. But it noted that oil’s recent decline came amid supportive factors like the dollar weakening.DXY and refining margins for gasoline 1RBc1-CLc1 widening.
Somewhere else, on the ICE Futures Exchange in London, delivery of Brent oil for October edged down 18 cents, or 0.42 percent, to $42.92 a barrel, after increasing $1.30, or 3.11 percent on Wednesday.
Meanwhile, preliminary weekly production data indicated that US crude output fell below 8.5 million barrels per day.
After falling to a 12-year low of sub-US$30 a barrel at the start of the year, prices regained ground on supply disruptions such as the Canada’s wildfires in its oil producing regions and rebels bombing supply lines in Nigeria. Crude remains oversupplied as top OPEC oil producers pump near record high levels.
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Gasoline stocks fell by 3.3 million barrels, compared with analysts’ expectations in a Reuters poll for a 200,000-barrel drop.
