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Brent crude was trading at $77.72 a barrel, up 3 cents, or
0.04%, by 1033 GMT, while U.S. West Texas Intermediate crude
rose 1 cent or 0.01% to trade at $74.31.
Prices stabilized as Russian Deputy Prime Alexander Novak
described oil markets on Thursday as balanced.
The OPEC+ group of leading oil producers does not see the need
for further oil output cuts but is always able to adjust its
policy, Novak said.
Oil prices dropped almost 4% on Wednesday as jitters about a
U.S. downturn overshadowed a larger-than-expected fall in U.S.
crude inventories. [EIA/S]
U.S. capital goods spending fell more than expected in the
latest data overnight, and weak risk sentiment spread from the
banking sector following First Republic Bank's continued slump.
Analysts see weak refinery margins as a major contributor to the
oil price decline, with Tamas Varga of oil broker PVM pointing
to heating oil and gasoil as "the main possible culprit for the
outsized weakness".
"Inventories in this product are somewhat reluctant to deplete,
possibly due to resilient Russian exports," Varga said.
Russia has increased exports of refined products despite an EU
embargo and oil price cap, sources told Reuters.
Falling refinery profit margins could lead to runs being cut and
a further reduction in crude demand, said Ole Hansen, head of
commodity strategy at Saxo Bank.
"For now, position adjustments will set the agenda but with an
overall negative bias until refinery margins show signs of
stabilizing," Hansen said.
Backwardation in the Brent futures curve has flattened to around
$1.75/bbl, having touched $4/bbl on April 12.
Backwardation, when prices for a front-month loading contract
are higher than contracts for later loadings, typically
indicates tight supply.
Markets will look for direction from the first quarterly print
of euro zone gross domestic product growth, due on Friday. The
data could impact monetary policy decisions by the European
Central Bank, which holds a policy meeting on May 4.
(Reporting by Rowena Edwards in London, additional reporting by
Sudarshan Varadhan in Singapore, Katya Golubkova in Tokyo;
Editing by Robert Birsel, Kirsten Donovan)
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