Brent crude futures settled down 90 cents, or 1.13%, at $78.65 a barrel and U.S. West Texas Intermediate crude futures declined $1.01, or 1.34%, to $74.52
Oil prices settled 1% lower on Wednesday after a smaller-than-expected draw in U.S. crude stockpiles and as worries over Chinese demand persisted, though losses were capped by supply risks in the Middle East and Libya.
Brent crude futures settled down 90 cents, or 1.13%, at $78.65 a barrel. U.S. West Texas Intermediate crude futures declined $1.01, or 1.34%, to $74.52.
Prices lost more than 2% on Tuesday, having added 7% over the previous three days to more than $81 a barrel for Brent and $77 for West Texas Intermediate.
U.S. crude inventories declined by 846,000 barrels to 425.2 million barrels last week, data from the Energy Information Administration (EIA) showed. Refining activity rose during the week.
It is a little surprising to see such a small crude draw if refinery runs were really that strong, at a six-week high, according to Matt Smith, lead oil analyst at Kpler. Ongoing strength in imports and a tick lower in exports helped keep the draw in check.
China demand concerns also continued to weigh on prices as recent data pointed to a struggling economy and slowing oil demand from refiners.
Demand in China remains weak and the expected second-half rebound has yet to show credible signs of commencing, Amarpreet Singh, an analyst at Barclays, said in a note.
The potential loss of Libyan oil output and the possible expansion of the Middle East conflict remained the largest risks to oil markets, limiting the price declines on Wednesday.
Several oilfields across Libya have halted output as a dispute continues between rival government factions over control of the central bank and oil revenue. The dispute puts nearly 1.2 million bpd of production at risk.
The Libyan disruptions should tighten the oil market, considering real barrels are removed, but here investors want to see a decline in Libyan crude exports first, according to Giovanni Staunovo, an analyst at UBS.
