Oil prices slightly pared losses on Thursday after official government data showed USA crude stocks fell, contradicting an earlier industry report that weighed on prices. Distillate stockpiles, which include diesel and heating oil, fell by 1.5 million barrels, versus expectations for a 2.2-million-barrel decline, the EIA data showed.
Brent crude oil was down 62 cents at $56.32 a barrel by 1:43 p.m. ET. Both benchmarks have risen more than 20 percent from their lows in June as world oil markets tightened.
A monthly oil report by the International Energy Agency (IEA) predicted global demand will grow by 1.6m barrels per day (bpd) in 2017 and 1.4m bpd in 2018.
Crude oil futures slipped Thursday, put pared early losses after the government said US oil inventories dropped last week. Prices rose 2% the day before to back above US$50 a barrel.
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The Organisation for Economic Co-operation and Development's (OECD) commercial stocks fell 14.2m barrels in August to just over 3bn barrels, leaving the surplus 170m barrels over the five-year average, down from 318m barrels at the end of January.
Carsten Fritsch, commodities analyst at Commerzbank in Frankfurt, said the tone of the IEA report was bearish because it suggested that demand for OPEC crude next year would not be sufficient to absorb all the available supplies. S. inventories and a falloff in weekly production on Thursday.
The EIA also forecasts USA crude production averaging 9.9M bbl/day in 2018, which would mark the highest annual average production in US history.
Rising U.S. output is expected to continue to cap upside in crude oil prices, as the EIA forecast total domestic production to average 9.9 million barrels a day in 2018, the highest annual average production in U.S. history. For 2018, oil demand is expected to rise by 420,000 bpd vs 400,000 bpd previously.