Oil prices has fallen more than $1 on Thursday, declining for the first time in six days, after the U.S. Federal Reserve dampened hopes for a string of rate cuts and Sino-U.S. trade talks ended without progress.
The drop came despite a bigger-than-expected decline in inventories in the U.S. and a drop in crude production among Organization of Petroleum Exporting Countries, OPEC, members, along with Libya cutting exports, typically bullish drivers for the market.
Brent crude the international benchmark, fell $1.06, or 1.6 per cent, to $63.99 a barrel while U.S. crude was down 93 cents, or 1.6 per cent, at $57.65 a barrel, having fallen more than $1 earlier.
The Federal Reserve cut interest rates on Wednesday, but against expectations the head of the U.S. central bank said the move might not be the start of a lengthy series of cuts to shore up the economy against risks including global economic weakness.
“Although the remarkably bullish U.S. inventory reports (are) providing a very encouraging backdrop for oil markets, oil prices sagged, as whatever forward-looking monetary policy support from the Fed has pretty much evaporated,” Stephen Innes, managing partner, VM Markets Pte said in a note.
Meanwhile, negotiators from the United States and China, the world’s two biggest economies, wrapped up a round of trade talks on Wednesday without visible signs of progress and put off their next meeting until September.
Also, U.S. crude oil stockpiles fell for the seventh straight week, declining to their lowest levels since November even as production rebounded and net imports increased, the Energy Information Administration, EIA, said on Wednesday.
Crude inventories fell 8.5 million barrels in the week ended July 26, far exceeding analysts’ expectations for a decrease of 2.6 million barrels.
Oil output among members of OPEC, hit an eight-year low in July as a further voluntary cut by top exporter Saudi Arabia deepened losses caused by U.S. sanctions on Iran and outages elsewhere in the group, a Reuters survey found.
Libya’s state-owned National Oil Corp declared force majeure on loadings of crude from the country’s largest oil field on Wednesday.
A Reuters monthly poll showed oil prices are expected to be range-bound near current levels this year as slowing economic growth and the protracted trade dispute between the U.S. and China curb demand.