Oil prices fell on Thursday, dragged down by the gradual return of Canadian oil sands output, reversing a sharp rise the previous day when the US government detailed an unexpected fall in crude inventories.
International Brent crude futures were trading at $47.47 per barrel at 0434 GMT (8.34am UAE time) on Thursday, down 13 cents from their last settlement. US West Texas Intermediate (WTI) crude futures dropped 12 cents to $46.11.
Traders said the dips were largely a result of profit-taking following intra-day Brent price rises of up to $2.95 the previous day when US government data surprised with a drop in crude inventories.
The US Energy Information Administration (EIA) said on Wednesday that US crude inventories fell 3.4 million barrels to 540 million barrels last week, compared with analyst expectations for an increase of 714,000 barrels and the American Petroleum Institute's (API) reported build of 3.5 million barrels in preliminary data issued on Tuesday.
The surprise draw in inventories was offset on Thursday by an expected increase in Canadian oil sand crude output following disruptions to over 1 million barrels of daily production capacity due to wildfire.
"We were not totally surprised with the draw after the shut-in Canadian production," said Tariq Zahir, managing partner at Tyche Capital Advisors in New York.
OPEC TALK, NOT ACTION
Despite the dip, major Middle East oil exporter Kuwait said that recent price rises were fundamentally justified.
"Based on the decrease in production that has been shown in the last three weeks, I assume fundamentally the price represents the fall of production," Kuwait's acting oil minister Anas al-Saleh told Reuters on Thursday.
He also said that the Organisation of the Petroleum Exporting Countries (Opec), of which Kuwait is a member, would not seek price supporting market intervention during its next scheduled meeting on June 2, and instead focus on dialogue among the producer cartel.