The U.S. Energy Information Administration said inventories fell by 4.6 million barrels in the most recent week, compared with expectations for an increase of 246,000 barrels. Oil held near US$63 a barrel after United States crude stockpiles declined and trade tensions between the United States and China showed tentative signs of easing.
"Equities have been the most significant external driver for the short-term price direction of oil, with the significant volatility coming (partly) from the perception of a trade war", said Dominic Chirichella, senior partner at the Energy Management Institute in NY.
WTI crude oil future -0.27% to $63.37/bbl at last check.
The price for Brent crude oil, the global benchmark for the price of oil, was up just 0.04 percent as of 9:16 a.m. EST to $68.05 per barrel. Prices erased most of their losses on Wednesday after data showed supplies stored in US tanks shrank the most since January, in contrast to a forecast for a 2 million-barrel gain.
"We're seeing the reaction across the board. crude oil is keeping an eye on stocks and with S&P (futures) down. we're seeing renewed weakness ahead of the EIA this afternoon", Saxo Bank head of commodities strategy Ole Hansen said. West Texas Intermediate crude for May delivery traded at $63.57 a barrel in electronic trade, up from its settlement of $63.51.
The decline in USA stockpiles has boosted optimism that surging shale output may not thwart Organization of the Petroleum Exporting Countries's (OPEC) efforts to drain a glut.
According to the Weekly Petroleum Status Report, U.S. commercial crude oil inventories, excluding those in the Strategic Petroleum Reserve, of the week ending March 30, decreased by 4.6 million barrels from the previous week.
Crude oil prices are under pressure early Wednesday on expectations for a build-up in US crude inventories.
The fall had exceed $1 per barrel before losses were pared by USA data released mid-morning showing a reduction of 4.6 million barrels to 425.3 million barrels in the previous week's crude inventories. The EIA data also showed that American oil production rose to an unprecedented 10.5 million barrels a day, topping the 10 million-barrel level for a ninth week.