By Barani Krishnan
NEW YORK (Reuters) – Oil prices rose in choppy trade on Thursday, snapping two days of sharp losses, after data showed a fourth weekly drawdown in U.S. crude stocks.
The U.S. Energy Information Administration (EIA) said crude oil inventories <USOILC=ECI> fell by 2.8 million barrels last week, ahead of Monday’s Memorial Day holiday, which unofficially kicked off the peak summer driving season in the United States.
It was a fourth straight week of declines in domestic crude stocks, contrary to the draw of 857,000 barrels forecast in a Reuters survey and the build of 1.3 million barrels estimated by the American Petroleum Institute.
Despite that, oil bulls could barely push the market higher right after the EIA data. U.S. crude was down most of the day and Brent was only up slightly, both rallying just before the close.
U.S. crude <CLc1> settled up 17 cents, or 0.3 percent, at $57.68 a barrel, after plumbing a one-month low of $56.51. In post-settlement trade, at 4:30 p.m. EDT, it was up 43 cents at $57.94 a barrel.
Brent <LCOc1> settled at $62.58, up 52 cents, or nearly 1 percent, after a six-week low at $61.24. It rose 84 cents in post-settlement trade.
Oil prices had fallen about 3 percent in the past two sessions on the strength of the dollar.
“My feeling is that demand for oil is growing as expected as we head into the summer, and if we can manage the headwinds posed by the dollar, we should be able to maintain an upward trajectory for prices,” said Phil Flynn, an analyst at Price Futures Group in Chicago.
Some attributed the price weakness earlier in the day to doubts that big weekly drawdowns in U.S. crude would continue for long. They cited the slowing pace in U.S. oil rig declines, which signaled more supply.
Last week’s big gasoline draw of 3.3 million barrels was driven by implied demand related to buying ahead of the Memorial Day weekend, said Jim Ritterbusch of Chicago-based Ritterbusch & Associates.
“We didn’t see any game changers in today’s data other than the possibility that the gasoline supply draw could delay some seasonal price weakening for another week or so,” he said.
Like crude, gasoline <RBc1> was late to rally on Thursday, although it settled up 2 percent.
Ritterbusch pinned oil’s near-term direction to the dollar, saying the currency’s reaction to Friday’s U.S. GDP and consumer sentiment data could determine how crude finishes the week.
(Additional reporting by Christopher Johnson in London and Henning Gloystein and Florence Tan in Singapore; Editing by Bernadette Baum, Jonathan Oatis and Peter Galloway)