Oil dips on demand worries despite surprise drop in U.S. crude stocks

By Sonali Paul
MELBOURNE, March 17 (Reuters) - Oil prices slipped for a
fourth day on Wednesday on worries about rocky demand in Europe,
even as hopes of a recovery in U.S. refinery activity were
boosted by industry data that showed U.S. crude stockpiles
unexpectedly fell last week.
U.S. West Texas Intermediate (WTI) crude CLc1 futures
dipped 5 cents to $64.75 a barrel at 0229 GMT, after climbing as
much as 28 cents in early trade.
Brent crude LCOc1 futures fell 10 cents, or 0.2%, to
$68.29 a barrel, after initially gaining as much as 23 cents.
The market has been drifting lower over the past few days
amid concerns about stalled vaccine rollouts slowing a recovery
in fuel demand.
"Concerns that demand could fall further have been rising as
Europe's health ministers suspend the rollout of AstraZeneca (NASDAQ:AZN)
vaccine amid health concerns," ANZ Research said in a note.
While demand is growing in India and the United States, it
remains weak in Europe, ANZ said, noting that France's road fuel
consumption fell 10.8% in February from a year earlier,
according to the country's petroleum industry federation UFIP.
On the positive side, U.S. crude inventories fell by 1
million barrels in the week to March 12, according to trading
sources citing data from the American Petroleum Institute.
Analysts in a Reuters poll had expected a build of 3 million
barrels, "The market was wrong-footed but still pleasantly surprised
after U.S. oil stockpiles unexpectedly fell last week," said
Stephen Innes, chief global market strategist at Axi.
At the same time, gasoline stocks fell less than expected,
declining by 926,000 barrels, compared with estimates for a draw
of 3 million barrels.
The "narrower weekly draw in gasoline stocks signalled that
refiner activity was normalizing after a big freeze in Texas
smothered production in the previous month," Innes said in a
note.
The historic icy spell in the southern U.S. states knocked
out nearly a quarter of the country's refining capacity last
month. Traders will be looking for confirmation of the drawdown in
crude stocks in official data due from the Energy Information
Administration due on Wednesday.