By Paul Carsten
LONDON (Reuters) -Oil prices were broadly steady on Thursday as investors took profits from earlier gains fuelled by larger than expected declines in stocks.
futures dipped 13 cents, or 0.2%, to $84.95 a barrel by 1120 GMT and U.S. West Texas Intermediate (WTI) crude was down 6 cents, or 0.1%, at $82.79. Both had registered gains in the previous session.
“Profit-taking is reasonable ahead of the U.S. jobless claims data, which will shape investors’ view on (interest) rate cuts this afternoon,” said Tamas Varga of oil broker PVM.
Crude inventories in the United States, the world’s largest oil consumer, fell by 4.9 million barrels last week, data from the U.S. Energy Information Administration showed on Wednesday. That exceeds a decline of 30,000 barrels forecast by analysts in a Reuters poll and a drop of 4.4 million barrels in an American Petroleum Institute report.[EIA/S][API/S]
“Healthy demand signals from the U.S. outweigh concerns from modest Chinese growth last week,” said Priyanka Sachdeva, senior market analyst at Phillip Nova.
“Hopes of a Fed easing (of interest rates), which can boost economic growth, and current summer travel in the U.S. are ensuring enough traction in oil demand from the world’s largest economy.”
The prospects of cuts to interest rates in both the U.S. and Europe over the coming months helped to support the market.
Federal Reserve officials said on Wednesday that the U.S. central bank is closer to cutting rates given inflation’s improved trajectory and a labour market in better balance, possibly setting the stage for a reduction in September.
U.S. economic activity expanded at a slight to modest pace from late May through early July with firms expecting slower growth ahead.
The European Central Bank, meanwhile, is all but certain to keep interest rates unchanged on Thursday, but it signalled that its next move is likely to be a cut.
However, Chinese economic growth remains a concern. Chinese leaders signalled on Thursday that Beijing would stay the course with economic policy, though few concrete details were disclosed. Together, those helped to check investor hopes of a push to boost consumption in the world’s second-largest economy.
“There is no clear signal of change in macro policies,” said Zhang Zhiwei, chief economist at Pinpoint Asset Management.
The dollar, meanwhile, was down for a third straight session. A weaker U.S. currency can boost demand for oil by making dollar-priced commodities cheaper for buyers holding other currencies.