US says oil inventories declined but not as much expected

Brent crude, used to price worldwide oils, fell 99 cents, or 2 percent, to $47.81 a barrel in London.

But the market has gyrated since hitting above $50 as a glut of refined products replaced worries about crude oversupply that caused a near two-year long tumble earlier.

Brent crude futures LCOc1 were trading at $46.88 per barrel at 0149 GMT on Friday, up 48 cents, or 1.03 percent, from their last settlement.

Some said the price fall had been an overreaction because crude stocks had dropped for nearly two months straight and US production had fallen by 12.3% since 2015 peaks.

Oil trimmed its biggest weekly decline in three months as investors weighed the largest drop in USA output since 2013 and a jump in payrolls against a smaller-than- expected stockpile decline.

American crude oil production is estimated to have fallen by more than 12 percent since its 2015 peak to now average less than 8.30 million barrels a day.

ENERGY: Oil prices fell after the Energy Information Administration said stockpiles remained historically high and didn’t decrease by as much as investors expected.

OIL: Benchmark U.S. crude rose 32 cents to $45.47.

The figure was much less than the American Petroleum Institute’s data published overnight which indicated that USA crude stockpiles fell by 6.7m barrels last week; declining for a seventh week in a row. Analysts surveyed by Bloomberg ahead of the release had expected a crude inventory decline of 2.5 million barrels in the week ended July 1.

As John Kilduff at Again Capital has pointed out, gasoline demand is near record highs at 9.8 million barrels, but oil refiners have been producing a lot of gasoline. On Thursday, it lost $2.29 or 4.8 percent, to $45.14 a barrel in NY. That was the biggest percentage loss for Brent in a day since February 9. Silver dropped 45 cents, or 2.2 percent, to $19.75 an ounce.

“This opens the door down to $43 on a technical basis”, said David Thompson, executive vice-president at Washington-based commodities broker Powerhouse. The number of active oil rigs in the USA rose by 11 to 341 last week, Baker Hughes Inc. data show.

Traders said, however, that the outlook was likely to be choppy as the threat of supply reductions could tighten markets.

“The data revealed that gasoline stocks witnessed a 3.6 million barrel fall”.