Wednesday's latest weekly dataset from the U.S. Energy Information Administration was another example of the dire situation in oil with crude oil inventories increasing by 6.77 million barrels in the week to May 31 versus forecasts for a stockpile draw of 0.85 million barrels. The nation's output target under the OPEC-led pact is 10.3 million bpd.
As if to suggest Thursday's gains were a temporary reverse of a relentless downward trajectory, Andrew Lipow, president of Lipow Oil Associates, pointed out that "The ongoing friction between the us and China, the USA and Mexico and the us and others on the trade front is really having a negative impact on the sentiment for economic growth around the world, which would lead to a reduction in the rate of growth of oil demand".
Brent crude futures gained $1.62, or 2.6%, to settle at $63.29 a barrel. But the market remains supported by signs of tighter supply, with disruptions rife from Venezuela to Russian Federation, and the Organization of Petroleum Exporting Countries expected to keep output limits when it meets in the coming weeks.
Brent for August settlement fell $1.34 a barrel, or 2.2 per cent, to settle at $60.63 in NY. The prospect of higher USA shale output and weakening demand from the trade wars does not bode well for oil prices.
U.S. West Texas Intermediate crude fell to a session low of $50.66 after the report, the lowest level since January 15.
Brent futures were down $1.77, or 2.9 percent at $60.20 a barrel by about 3 p.m. GMT, having briefly traded in positive territory early in the session.
USA oil futures fell below $51 a barrel on Wednesday, completing a swoon of more than 20% since late April as the Trump administration's multiple trade disputes escalated. A breakdown in trade talks between the United States and China and threats of new American tariffs against Mexico have stoked fears about a world economy that's already showing signs of weakness.
Signs of slowing global economic activity have increased in recent months, fuelled by trade tensions between the United States and China, the world's top two energy consumers.
Oil prices are up 16% so far this year thanks in part to the OPEC+ deal. At a St. Petersburg conference, Saudi Arabian Energy Minister Khalid Al-Falih said he was sure OPEC and its partners will prolong output restraints into the second half of the year.
The group will set its policy when it meets later this month or in early July.
"The weak economic data and widening trade conflict have made for a gloomier demand outlook".