Oil prices eased slightly but held above $102 a barrel on Thursday as expectations for reduced demand due to warmer weather contrasted with a smaller-than-expected increase in U.S. oil supplies.
By early afternoon in Europe, benchmark U.S. crude for April delivery was down 11 cents to $102.48 a barrel in electronic trading on the New York Mercantile Exchange.
The contract closed up 76 cents Wednesday at $102.59 after the U.S. Energy Department said crude oil supplies rose by 68,000 barrels last week, well below the increase of 1.5 million barrels expected by analysts surveyed by Platts. Supplies at the key storage point in Cushing, Okla., fell by 1.1 million barrels.
The figures from inventories pointed to resilient demand, but oil shed some of those gains Thursday as the approach of spring in the U.S. and weaker Chinese manufacturing could reduce crude consumption.
Investors will be watching for new policy initiatives from China’s annual legislative session in early March to see what steps the government might take to shore up growth.
“We expect oil prices to fall in the spring once the cold winter weather comes to an end in the U.S. and the refineries process less crude oil while maintenance work is carried out,” said a note to clients from analysts at Commerzbank in Frankfurt. “Furthermore, part of the currently missing oil supply from Libya is likely to return to the market then.”
Production and export difficulties in Libya and South Sudan have helped sustain a risk premium on prices.
A firmer dollar also helped pull down oil prices by making crude more expensive — and a less attractive investment — for traders using other currencies. The euro was down to $1.3657 on Thursday from $1.3685 late Wednesday in New York.
Brent crude, which is used to set prices for international varieties of crude, was down 67 cents to $108.85 on the ICE Futures exchange in London.
In other energy futures trading on Nymex:
—Wholesale gasoline lost 1.91 cents at $2.9666 per gallon.
—Heating oil shed 1.62 cents to $3.0221 per gallon.
—Natural gas retreated 6.6 cents to $4.475 per 1,000 cubic feet.