Oil prices slip despite hefty US inventory fall

LONDON: Oil prices slipped after early gains on Thursday, pressured by rising COVID-19 infections in India and elsewhere and despite a much sharper than expected fall in US crude inventories.

Brent crude oil futures fell by 48 cents, or 0.7%, to $68.48 a barrel by 1355 GMT. West Texas Intermediate (WTI) US crude futures 54 cents, or 0.8%, to $65.09.

Both benchmarks hit their highest since mid-March on Wednesday before retreating to close little changed after two days of gains.

Hopes that India's deadly second coronavirus wave was about to peak were swept away on Thursday as it posted record daily infections and deaths, with the virus spreading from cities to villages across the world's second-most populous nation.

"The record numbers of new infections in India have been making the headlines and fuelling fears that demand may recover more slowly," Commerzbank said.

At the same time, easing restrictions in Europe and falling US crude inventories provided price support.

"As the rollout of vaccines continues and a pent-up summer driving season continues to manifest, this trend should accelerate, keeping demand for motor fuels robust and boosting market confidence in the recovery story," Citi analysts said in a note.

US crude stocks fell more than expected last week as refining output rose and exports surged, the Energy Information Administration said on Wednesday.

Crude inventories fell by 8 million barrels to 485.1 million barrels in the week to April 30, compared with expectations in a Reuters poll for a drop of 2.3 million barrels.

This fall was chiefly attributable to "a massive fall in net crude oil imports to around 1.3 million barrels per day, their lowest level in at least 40 years", Commerzbank analysts said.

They added that gasoline demand in the world's largest oil importer has proved disappointing, with stocks rising slightly last week.