USA data on Wednesday showed a jump in crude inventories, taking by surprise investors who expected a drawdown in supply.
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On Wednesday, New York-traded oil futures sank $1.06, 2.48%, after data showed that US crude supplies rose for the third straight week.
Traders said a drop of 8.1 percent in China’s oil output in July, to a five-year low of 16.72 million tonnes, also lifted prices because it would mean Asia’s biggest economy has to import more crude. U.S. Gulf Coast cracking margins were $5.06 per barrel (-$0.03 per barrel month-on-month) with utilisation of 87 percent.
USA light crude traded around $41.15 a barrel by 0830 GMT, down 56 cents.
International Brent crude futures were at $43.95 a barrel, down 10 cents.
Refiners around the world will process record volumes of crude this quarter to absorb all-time high production from several Persian Gulf producers, the IEA said.
“Crude oil stocks rose 1.06 million barrels to 523.6 million barrels”.
Motor gasoline product supplied over the last four weeks averaged about 9.8 million barrels per day, up by 1.7 perncet year-over-year.
United States benchmark West Texas Intermediate for September delivery edged up a cent to $41.72, compared with the close on Wednesday.
In June, Saudi Arabia had said it would not increase output, during the last OPEC meeting, showing a concern that oil prices could go back down amid oversupply.
The U.S. Energy Information Administration added to the market’s unease when on Tuesday it forecast a smaller decline in U.S. crude oil production in 2016 than it projected a month ago as drilling activity picks up.
Crude oil prices were swinging up and down in the early rounds of Thursday trading after a new report showed a fluid situation in the global energy market.
In its Monthly Oil Market Report that came out on Wednesday, OPEC said that now its latest estimates peg the total oil demand at 94.26 mb/d.
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That came after the International Energy Agency (IEA) had warned global demand for oil was likely to fall by 100,000 barrels per day to 1.2m barrels, thanks to a dimmer economic outlook after the Brexit vote.
