Oil prices stabilise on US stock drop and slower inflation

LONDON, May 16 (Reuters): Brent oil futures held steady on Thursday, bolstered by signs of stronger demand in the U.S. after slower than expected inflation in April and lower oil stocks in the past week.
Brent crude futures were up 4 cents, or 0.05 per cent, at $82.79 a barrel by 1120 GMT. US West Texas Intermediate crude (WTI) gained 4 cents, or 0.05 per cent, to $78.67.
"Oil is making some moderate headway, buoyed by shrinking U.S. stockpiles and a wider risk-on mood triggered by signs of ebbing U.S. inflation, offering scope of looser Fed policy," MUFG analysts Ehsan Khoman and Soojin Kim said in a note.
Brent had touched an intra-day low of $81.05 on Wednesday - the lowest the front-month futures contract has traded since Feb 26 - but recovered to about 0.5 per cent higher on the day.
U.S. crude oil, gasoline and distillate inventories fell, reflecting a rise in both refining activity and fuel demand, Energy Information Administration (EIA) data showed.
Crude inventories fell by 2.5 million barrels to 457 million barrels in the week ended May 10, the EIA said, versus the 543,000 barrel consensus analyst forecast in a Reuters poll
"With refinery runs increasing by 1.9% there suddenly became a whiff of demand. This then caused the handbrake turn in price fortunes and the verve shown in earlier selling was called and raised by buying that saw all losses erased," said PVM analyst John Evans.
U.S. consumer prices rose less than expected in April in a boost to financial market expectations for a September cut to interest rates by the Federal Reserve, which could temper dollar strength and make oil more affordable for holders of other currencies.