Oil prices steady as US crude draw limits downside

Oil prices were steady on Thursday, after falling for four straight days as investors worried about the global demand outlook, but a decline in U.S. fuel inventories provided a floor, reports Reuters.

Brent crude futures gained 31 cents, or 0.41 per cent, to $76.36 a barrel, while U.S. West Texas Intermediate crude futures inched 18 cents up, or 0.25 per cent to $71.80, at 1031 GMT.

So far this week, Brent has fallen 4.2 per cent while WTI crude is down 6 per cent.

Prices plunged on Wednesday as revisions to jobs data in the United States, added to concerns about crude demand after weak economic data out of China last week.

The United States is the world's biggest oil consumer and China is the world's largest oil importer.

A report of revised employment statistics released on Wednesday showed fewer jobs were added this year in the United States than previously reported.

"The potential weakness in the U.S. economy coupled with a lacklustre recovery in China suggests oil demand growth is to be towards the lower end of expectations," said Panmure Liberum analyst Ashley Kelty.

Underpinning prices, a U.S. government report on Wednesday showed U.S. crude, gasoline and distillate inventories fell in the week ending Aug. 16, while refinery runs increased.

"The larger than expected draw in U.S. stocks last week was a fillip which limited losses, with the EIA reporting a draw of 4.6 million barrels (mmbbls) last week - well above the forecast 2.6 mmbbl draw," Kelty added.

Investors are also expecting that the Organization of the Petroleum Exporting Countries (OPEC) and its allies such as Russia, known as OPEC+, will lift some voluntary output cuts in October, adding more supply.

Concerns over how OPEC+ production would pan out in the fourth quarter if the cuts are lifted has exacerbated price weakness, though they could be paused or reversed if needed.

"The downward pressure on prices makes it increasingly likely that OPEC+ will have to scrap their plans for gradually increasing supply from October. Failing to do so, will likely put further pressure on prices," said ING analysts in a client note.

Concerns over the Israel-Gaza war have eased in the past week as the U.S., Israel and Hamas are trying to hammer out a ceasefire deal, though U.S. diplomatic efforts earlier this week ended without a truce.

"Upside catalysts for oil may seem limited for now, with rising odds of a ceasefire in the Middle East, which saw market participants pricing out some of the geopolitical risks," IG market strategist Yeap Jun Rong said in an email.