US benchmark West Texas Intermediate (WTI) for July delivery eased 11 cents to $60.61 while Brent crude for July fell 18 cents to $66.33 in afternoon trade.
WTI surged $1.74 and Brent jumped $1.51 on Thursday in a second day of rallies after the US Department of Energy (DoE) released its latest petroleum stockpiles report, which was largely seen by analysts as bullish.
“Now, the rally seems to have fizzled out probably due to profit-taking as the market re-adjusts,” Nicholas Teo, market analyst at CMC Markets in Singapore, told AFP.
The DoE report Wednesday showed US crude inventories fell for the third consecutive week, by 2.7 million barrels, much more than analysts expected.
Declining US reserves usually indicate healthy demand in the world’s top crude consumer.
“We never expected the US inventories numbers to fall that much and last night’s price rally is due to traders reacting to this drop,” said Teo.
The report also showed US production falling 112,000 barrels a day to 9.26 million.
The fall in output has raised hopes of an easing in the build-up of global crude reserves, which was a key reason for the collapse in prices of more than 50 percent between June and January.
Daniel Ang, investment analyst at Phillip Futures in Singapore, said oil prices remain well supported due to a weaker dollar, as expectations of a US interest rate rise in the near-term dissipate.
Minutes from the US Federal Reserve’s April policy meeting released Wednesday showed board members are concerned the world’s biggest economy is not yet ready to absorb a rate hike from current record lows.
“With the expectation of interest rate hikes being pushed back, the US dollar strength would remain lower for an extended period of time,” Ang said.
A weaker US dollar makes dollar-priced oil cheaper for international investors and so tends to boost demand. (AFP)