Oil prices rose as much as 1% on Thursday, boosted by inventory draws at the U.S. crude futures' delivery hub although gains were capped by tumbling equity prices on Wall Street.
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Market intelligence firm Genscape estimated a drawdown of 625,000 barrels out of the Cushing, Oklahoma delivery point for U.S. crude in the week to Sept. 22.
The Genscape estimate, coming after a stockpile drop of 462,000 barrels at Cushing reported by the U.S. Energy Information Administration (EIA) last week, drove up prices of both U.S. crude and global oil benchmark Brent.
But an equity markets selloff trimmed the gains in oil, as the Standard & Poor's 500 index <.SPX> for U.S. stocks fell on concerns of slowing global economic growth. [.N]
"There was a technical bounce after the Genscape numbers were noticed by the market, though there were also new lows from sell-stops after the S&P tanked," said Peter Donovan, broker at New York's Liquidity Energy.
Oil is down more than 25% so far this quarter.
On Wednesday alone, U.S. crude prices fell 4% after the EIA reported a big build in gasoline stockpiles.[EIA/S]
The higher gasoline supplies came after the end of the peak U.S. summer driving season, raising concerns about demand for motor fuels which is usually weaker in autumn.
Many analysts think the long-term outlook for crude will stay downbeat as inventories pile and demand slows further into winter.
"For now, we still expect some additional price consolidation into next month," said Jim Ritterbusch of oil consultancy Ritterbusch & Associates in North Wabash, Chicago. "We also view a return to this year's lows as high probability of about 85-90%."
Friday could be another volatile day for oil with revised reading for U.S. economic growth in the second quarter due, along with weekly U.S. oil rig count data, analysts said.
Oil bulls will be counting on a fourth weekly decline in the U.S. oil rig count issued by industry firm Baker Hughes that would indicate lower production in the future. [RIG/OUT]
(By Barani Krishnan; Additional reporting by Simon Falush; Editing by Marguerita Choy and Meredith Mazzilli)