By Jessica Resnick-Ault
NEW YORK (Reuters) -Oil prices settled lower on Thursday, reversing early gains under pressure from rising COVID-19 infections in India and elsewhere although prices retained some support from a report a day earlier that U.S. crude inventories fell more sharply than expected.
Brent crude oil settled lower by 87 cents, or 1.3%, at $68.09 a barrel. West Texas Intermediate (WTI) U.S. crude futures dropped 92 cents, or 1.4%, to $64.71.
"When Saudi Arabia cut their crude selling price, it was a stark reminder that there are still pockets of danger of COVID that could impact demand," said Phil Flynn, a senior analyst at Price Futures Group in Chicago.
On Wednesday, both benchmarks hit their highest since mid-March before retreating to close little changed after two days of gains.
India posted record daily COVID-19 infections and deaths, with the virus spreading from cities to villages across the world's second-most populous nation, dashing hopes that its deadly second wave was about to peak.
"The record numbers of new infections in India have been making the headlines and fueling fears that demand may recover more slowly," Commerzbank (DE:CBKG) said.
Yet easing restrictions in Europe and falling U.S. crude inventories supported prices.
"As the rollout of vaccines continues and a pent-up summer driving season continues to manifest, this trend should accelerate, keeping demand for motor fuels robust and boosting market confidence in the recovery story," Citi analysts said in a note.
U.S. crude stocks fell more than expected last week as refining output rose and exports surged, the Energy Information Administration said on Wednesday. [S/EIA]
U.S. crude inventories fell by 8 million barrels in the most recent week, compared with expectations in a Reuters poll for a drop of 2.3 million barrels, the Energy Information Administration said on Wednesday.
Commerzbank analysts cited "a massive fall in net crude oil imports to around 1.3 million barrels per day, their lowest level in at least 40 years." [EIA/S]
They added that gasoline demand in the world's largest oil importer has proved disappointing, with stocks rising slightly last week.