The Department of Energy said Wednesday that inventories slid 3.4 million barrels last week, confounding analysts’ expectations for a rise and signalling strong demand in the world’s top oil-consuming nation.
The report also said US oil production fell, providing hope to a market burdened by a stubborn global supply glut.
At around 0345 GMT, US benchmark West Texas Intermediate for delivery in June was down 13 cents, or 0.28 percent, at $46.10 and Brent crude fell 16 cents, or 0.34 percent, at $47.44 a barrel.
WTI jumped 3.5 percent Wednesday while Brent climbed 4.6 percent, putting both contracts around levels not seen since November.
Traders “maybe feel that prices have moved up too much. Sometimes they are trying to get to a certain level where they can sell and then lock in profits”, said Bernard Aw, an analyst with IG Markets Singapore.
News of the unexpected decline in US commercial crude stockpiles “had more of an impact on prices because they (traders) were expecting an increase in the inventories”, he added.
While the fundamentals of oversupply and weak demand remain, Aw said short-term disruptions such as the wildfires in Canada’s oil-rich Alberta region and the closure of a key Shell pipeline in Nigeria following a leak are boosting prices.
“If you look at the current trend for oil, it has been steadily climbing. But overall, the fundamental picture has not materially changed,” he said.
EY oil and gas analyst Sanjeev Gupta said: “In the near term, the market will seek clues from the upcoming eurozone economy data as well as key (economic growth) and inflation statistics from Japan and the US.”
A meeting of the OPEC oil cartel on June 2 in Vienna would also impact the market, he added.