Oil prices fell on Thursday, giving up some of the recent strong gains on profit-taking and speculation that the market’s strength could tempt producers like Saudi Arabia to reduce output by less. Brent crude fell 40 cents, or 0.7%, to $61.07 a barrel, as of 0350 GMT, after touching its highest since January 2020 on Wednesday, after a strong run in recent days driven by the Organisation of Petroleum Exporting Countries and its allies, known as OPEC+, agreed output cuts and vaccine rollouts fired up hopes of a recovery in demand.
US crude slid 35 cents, or 0.6%, to $58.33 a barrel. Crude stocks last week fell for a third straight week, dropping 6.6 million barrels to 469 million barrels, their lowest since March, according to the Energy Information Administration. Analysts in a Reuters poll had forecast a 985,000-barrel increase.
Brent has risen for the previous nine sessions, its longest sustained period of gains since January 2019. Wednesday had marked the eighth daily rise for US crude. Some analysts say prices have moved too far ahead, and could tempt producers to open their taps a bit more.
“Despite finding support for the large draw in the US crude stockpiles… oil prices couldn’t hold into its gains possibly on the expectation that Saudi Arabia could roll back their unilateral Feb/Mar production cuts and that OPEC could signal more production coming back online at the March meeting given the sizzling recovery in oil prices,” said Stephen Innes, chief global markets strategist at brokerage Axi.
Asian shares rested at record highs on Thursday as investors digested recent meaty gains, though the promise of endless free money to sustain buying was reaffirmed by benign US inflation data and a very dovish outlook from the Federal Reserve. Crude has jumped since November as governments kicked off vaccination drives for COVID-19 while putting in place large stimulus packages to boost economic activity, and the world’s top producers kept a lid on supply.
Top exporter Saudi Arabia is unilaterally reducing supply in February and March, supplementing cuts agreed by other members of the Organization of the Petroleum Exporting Countries (OPEC) and allies, known as OPEC+.