Oil Price Rally Falters Despite Unexpected Drop in U.S. Inventories

Oil prices slipped on Wednesday, threatening to end the longest rally in two years as investors shrugged off industry data showing a fall in U.S. crude oil stocks that added to optimism about an expected rise in global fuel demand.

Brent crude was down by 1 cent at 61.08 by 0752 GMT after rising nearly 1 on Tuesday, when it touched a 13month high. U.S. crude dropped 8 cents to 58.28.

Brent had risen for eight days in a row, the longest sustained run of gains since January 2019. U.S. oil had gained for seven days, the longest rally since February 2019.

Higher oil prices may encourage increased output globally, while increased hedging could also limit further upside, said Kevin Solomon, energy economics analyst at StoneX.

The U.S. Energy Information Administration EIA said this week it expects production in the United States to rise in the second half of 2021 and in 2022, although it revised down its estimated output increase for all of this year.

Crude inventories in the United States fell by 3.5 million barrels in the week to Feb. 5 to about 474.1 million barrels, data from the American Petroleum Institute API showed on Tuesday.

That compared with analysts expectations in a Reuters poll for an increase of 985,000 barrels. Official EIA data is due at 1530 GMT on Wednesday.

Crude oil stocks at the Cushing, Oklahoma, delivery point dropped by 1.4 million barrels, API said.

Still, inventories of gasoline rose, gaining by 4.8 million barrels, compared with analysts…

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