Oil prices slipped on Wednesday, threatening to end the longest rally in two years as investors shrugged off industry data showing a fall in U.S. crude oil stocks that added to optimism about an expected rise in global fuel demand.
Brent crude was down by 1 cent at $61.08 by 0752 GMT after rising nearly 1% on Tuesday, when it touched a 13-month high. U.S. crude dropped 8 cents to $58.28.
Brent had risen for eight days in a row, the longest sustained run of gains since January 2019. U.S. oil had gained for seven days, the longest rally since February 2019.
“Higher oil prices may encourage increased output globally, while increased hedging could also limit further upside,” said Kevin Solomon, energy economics analyst at StoneX.
The U.S. Energy Information Administration (EIA) said this week it expects production in the United States to rise in the second half of 2021 and in 2022, although it revised down its estimated output increase for all of this year.
Crude inventories in the United States fell by 3.5 million barrels in the week to Feb. 5 to about 474.1 million barrels, data from the American Petroleum Institute (API) showed on Tuesday.
That compared with analysts’ expectations in a Reuters poll for an increase of 985,000 barrels. Official EIA data is due at 1530 GMT on Wednesday.
Crude oil stocks at the Cushing, Oklahoma, delivery point dropped by 1.4 million barrels, API said.
Still, inventories of gasoline rose, gaining by 4.8 million barrels, compared with analysts’ forecasts in a Reuters poll for a build of 1.8 million barrels. Official data is due later on Wednesday.
Oil prices have rallied since November as governments kicked off vaccination drives for COVID-19, while putting in place large stimulus packages to boost economic activity.
The world’s biggest oil exporter, Saudi Arabia, is unilaterally reducing supply in February and March, adding to cuts agreed by other members of the Organization of the Petroleum Exporting Countries (OPEC) and their allies.
Some analysts are now forecasting there will be a supply deficit in 2021 as more populations get vaccinated and start going away on trips and working in offices, potentially boosting fuel demand.
Total’s president, innovation and strategy, Helle Kristoffersen, is predicting a supply deficit of 10 million barrels per day by 2025, according to comments reported by Argus Media on Wednesday.
Reporting by Aaron Sheldrick. Editing by Richard Pullin and Mark Potter