By Barani Krishnan
Investing.com - The oil market is having trouble deciding what's more important to immediate price direction, relatively high demand for U.S. fuels that could add support to this year's rally or global economic concerns that could ultimately stifle demand.
Crude prices swung between negative and positive territory on Thursday as players mused over encouraging drawdowns for gasoline, diesel and other oil products in weekly data released a day ago by the U.S. government against fresh worries about Europe's economies and the unresolved U.S.-China trade conflict.
New York-traded West Texas Intermediate crude was up 51 cents, or 0.9%, at $56.73 per barrel by 12:54 PM ET (17:54 GMT), after an undulating trade pattern that saw it rise up to 1.4% and fall as much as 0.2% at one point. The U.S. crude benchmark has struggled to establish clear direction since a slide of nearly 3% on Friday.
London's Brent, the global oil benchmark, was up 34 cents, or 0.5%, at $66.73 per barrel. It gained 1.5% at the peak and declined 0.4 % at the lows.
"There were some good numbers in the weekly U.S. fuel demand reported yesterday and that's what's holding the market up against the uncertainties we keep getting out of the eurozone and China," said Gene McGillian, senior analyst at Tradition Energy in Stamford, Conn.
The U.S. Energy Information Administration reported on Wednesday that gasoline inventories fell by 4.23 million barrels last week, versus forecasts for a draw of 2.08 million barrels. Distillate stockpiles, which include diesel, decreased by 2.39 million barrels, more than the expected decline of 1.44 million barrels.
The strong draw for oil products reduced the negative impact from the 7-million-barrel build in crude stockpiles for last week, which came in around 6x above traders' targets.
Thursday's gyrations in oil were the result of a weaker stock market reacting to European Central Bank's decision to pump-prime bank loans again to stimulate the region's struggling economies.
The ECB pushed out its first post-crisis rate hike to at least next year, adding to a cocktail of concerns over trade tensions, Brexit uncertainty and global growth risks, which have weighed on markets over the past year. Investors have also been spooked by the inability of U.S. and Chinese negotiators to announce a trade deal despite multiple meetings this year.
Crude prices have had their best start to a year so far, with WTI up 23% for 2019 and Brent gaining 22%, on hefty production cuts by the enlarged OPEC+ alliance of 25 oil producing countries led by Saudi Arabia and Russia.