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Oil futures were edging lower on Thursday as investors wrestled with the outlook for crude demand amid further signs of slack in the global economy. A day ago, crude marked the highest finish in a month after a key weekly inventory report showed a decline in U.S. crude supplies.
December WTI crude CLZ19, +0.36% edged 12 cents, or 0.2%, lower at $55.84 a barrel on the New York Mercantile Exchange, after jumping 2.7% on Wednesday.
Global benchmark Brent crude for December BRNZ19, +0.51%, meanwhile, slipped 6 cents, or 0.1%, to $61.11 a barrel on the ICE Futures Europe exchange, after closing at the highest for the front-month contract finish since Sept. 27.
A report from Germany reinforced the view of a global slowdown after the IHS Markit flash German manufacturing PMI inched up to 41.9 in October from September’s decade-worst 41.7, which is still a reading that shows the factory segment of the country’s economy in dire straits. Readings below 50 indicate contraction.
On top of that, the European Central Bank left its main deposit facility rate at negative 0.5% and its main lending rate at 0%. The rate-setting Governing Council repeated that it expects to keep rates at “present or lower levels” until inflation, which has remained stubbornly low, “robustly” converges with its target of near but just below 2%. It also reiterated that it will begin a controversial bond-buying program at a pace of 20 billion euros a month beginning in November.
“Oil prices remained heavy after Germany’s manufacturing downturn remains firmly in place despite a slight uptick from last month. The euro area is barely growing as a whole, and we should see that continue to put pressure on demand forecasts,” wrote Edward Moya, senior market analyst at brokerage Oanda, in a daily research report.
“Oil may struggle for a significant rally unless OPEC + deliver further queues that they will deepen production cuts in December or if we get a significant de-escalation in the US-China trade war,” he said.
Earlier in the week, markets bounced after reports indicated that the Organization of the Petroleum Exporting Countries and their allies would consider making further reductions to crude output when they meet in December because of growing concerns about a slowdown in growth for oil demand, Reuters reported Tuesday, citing sources from the oil-producing club.
On Wednesday, the Energy Information Administration reported that U.S. crude supplies fell for the first time in six weeks, down 1.7 million barrels for the week ended Oct. 18. Separately, supplies of oil from the U.S. Strategic Petroleum Reserve, or SPR, fell by 1 million barrels for the week.
Crude supplies were forecast to increase by 4.7 million barrels, according to analysts polled by S&P Global Platts. The American Petroleum Institute on Tuesday reported a rise of 4.45 million barrels.
Earlier in the week, markets bounced after reports indicated that the Organization of the Petroleum Exporting Countries and their allies would consider making further reductions to crude output when they meet in December because of growing concerns about a slowdown in growth for oil demand, Reuters reported Tuesday, citing sources from the oil-producing club.
