Oil prices steady after US stock draw, but China outlook drags

In addition, the outage of a 290,000 barrel-per-day distillation unit at BP PLC’s Whiting refinery in Indiana was thought to reduce commercial crude demand, further adding to stockpiles.

The worldwide Energy Agency (IEA) in its monthly report mentioned that it was sharply increasing its demand growth outlook for present year and for 2016.

Prices had moved off six-year lows on Wednesday on news that US crude supplies fell-a sign of stronger demand in the world’s top oil consumer-and the dollar declined.

OPEC said its forecast for European oil demand during 2015 has improved since the organisation’s report last month, but that it remains “coupled with large uncertainties” in terms of the region’s economic developments, particularly in Greece.

“We’re approaching the six-year low and are going to test it soon”, Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, said by phone.

A rise in the dollar (.DXY), after higher U.S. retail sales in July and strengthening employment data, added to the weight on oil. Brent futures were trading at $49.21 a barrel, down 1 cent from their last settlement but still some way off from their 2015-low of $45.19.

West Texas Intermediate for September delivery was at $41.94 a barrel on the New York Mercantile Exchange, down 29 cents, at 8:57 am London time.

In contrast, record global inventories and massive supplies could drag crude oil prices lower.

“All is not well with the Chinese economy”, Howie Lee of Phillip Futures told Reuters Global Oil Forum. WTI closed down to $42.24 barrel while Brent lost to $49.15 barrel.

Oil prices initially rose in early Asian trade following a sharp and sudden fall below $42, but dipped back under that level to trade almost a third below their 2015-highs in May.

While concerns about China’s economy have triggered the latest leg of weakness in oil prices, the primary factor pressuring the market is a glut of supplies.

This is going to be a big advantage for vehicle owners, drivers, shippers and airlines that enjoy the lower fuel prices due to the fall on the crude oil’s price while the oil industry is getting lower profits forcing them to cut down on expenditures and employment.