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Brent crude was down 71 cents, or 1%, at $71.54 a barrel by 0939
GMT, having risen 1.7% on Wednesday.
U.S. West Texas Intermediate oil was down 78 cents, or 1.15%, at
$67.58 a barrel, after gaining 1.2% in the previous session.
The U.S. Energy Information Administration (EIA) reported that
American crude inventories fell last week for a third
consecutive week and overall fuel demand increased to the most
since March 2020.
But the demand picture is not entirely bullish.
"For now, U.S. consumers appear to be shrugging off the spread
of the Delta variant ... However, it seems likely that we are
near the peak in U.S. demand, which will act as a lid on oil
prices," Capital Economics said in a note.
The return of output in Mexico, where a fire on Sunday on an
offshore platform killed at least five workers and knocked out a
bit more than 400,000 barrels per day (bpd) of production, is
also weighing on prices.
Pemex had so far recovered 71,000 bpd of production and expects
to add an additional 110,000 bpd within a few hours.
More broadly, fresh COVID-19 outbreaks fuelled by the Delta
variant of the coronavirus are raising concerns about the
strength of the economic recovery globally.
"Push-and-pull factors have led oil prices to gyrate wildly in
recent weeks. Looking ahead, the balancing of cyclical demand
headwinds with structural supply tailwinds, leads us to remain
neutral-to-bearish on oil prices for the rest of 2021," said
Ehsan Khoman, director at MUFG Bank.
(Reporting by Aaron Sheldrick in Tokyo and Dmitry Zhdannikov in
London; editing by Kim Coghill and Jason Neely)
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