Oil slid to less than $61 per barrel due to a surprise drop in US crude inventories. Economic weakness hit the market—its latest sign, the lower oil demand and the decreasing employment in Germany’s private sector, which went down for the first time in six years in October.
Brent crude LCOcl fell 26 cents, down to $60.91 per barrel by 1015 GMT, from its 2.5% increase on Wednesday and highest since Sept. 30. Meanwhile, US West Texas Intermediate crude CLcl fell 34 cents, or $55.63.
“Oil may now be off its lows, but gains are very gradual and downward pressures, most notably as a result of the subdued global outlook, persist,” Craig Erlam, analyst at broker OANDA said.
Crude’s gains on Wednesday were due to the unanticipated drop in US inventories.
Data from the EIA (Energy Information Administration showed that US crude inventories slipped to 1.7 million barrels in the week that ended on Oct. 18, in comparison to analyst expectations of a 2.2 million barrel increase.
“Yesterday’s sugar rush was provided by the EIA but economic considerations will likely take over the steering wheel soon,” Tamas Varga of oil broker PVM said.
Brent prices rose 13% this year, backed by a supply pact among the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
OPEC, Russia, and other producers have agreed on a deal that cut oil output by 1.2 million barrels per day (bpd) until March of 2020 to hold the market. The producers will meet on Dec. 5-6 to review the policy.
Officials said that extended supply curbs stand as an option to offset the weaker demand outlook for OPEC crude in 2020.
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