Oil prices slip as big draw in crude stocks plays second fiddle to economic jitters

Investing.com -- U.S. crude oil prices settled lower Wednesday, as ongoing worries about slowing economic growth continued to cloud the outlook for oil demand, overshadowing data showing a much larger-than-expected drop in weekly crude inventories.

On the New York Mercantile Exchange crude futures settled 1.26% lower at $76.10 a barrel, while on London's Intercontinental Exchange, Brent fell 1.54% to settle at $79.53 a barrel.

Inventories of U.S. crude fell by 5.1 million barrels for the week ended Apr. 21, following a 4.6M barrel draw in the prior week and below the expected 1.5M barrel decrease, according to data from the Energy Information Administration (EIA).

The large decrease in crude supplies was driven by another big release from the Strategic Petroleum Reserve, which dropped by more than 1M for a second straight week.

Gasoline inventories, meanwhile, fell by 2.4M barrels, compared with expectations for a draw of 933,000 barrels, while supplies of distillate -- the class of fuels that includes diesel and heating oil – slipped by 576,0000M barrels, but that was short of expectations for a decrease of 839,000 barrels.

The mixed products data emerged as refinery activity edged up to 91.3% of capacity last week from 91% the prior week, with crude inputs averaging about 15.83M barrels per day, down 11,000 barrels from the prior week, the EIA said.

The mostly positive inventory data, however, played second fiddle to ongoing fears about the impact of a slowdown in the U.S. economy on energy demand.

“The lack of a strong signal from fundamental data has seen investors with a short-term focus dominate trading,” ANZ Research said in a note. “This has seen Brent crude hover around levels seen just before OPEC surprised markets with an output cut at early April,” it added.

Traders, meanwhile, also appear reluctant to make big bets ahead of the Federal Reserve’s May 2-3 meeting that is expected to culminate in what many expect may prove the final rate hike for the year.