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UPDATE 3-Oil slips for 4th day on European demand worries

UPDATE 3-Oil slips for 4th day on European demand worries

· 03/17/2021 01:25
UPDATE 3-Oil slips for 4th day on European demand worries

API report shows surprise drop in U.S. crude inventories

No policy shift expected by U.S. Federal Reserve

Coming up: EIA report, 1430 GMT

Updates prices, adds quotes, changes dateline to London

By Alex Lawler

- Oil slipped for a fourth day on Wednesday as concerns about weaker demand in Europe outweighed an industry report that showed U.S. crude stockpiles unexpectedly fell last week.

Several European countries have paused the use of AstraZeneca's COVID-19 vaccine due to worries over possible side effects. Germany is seeing rising coronavirus cases, while Italy is imposing a nationwide Easter lockdown.

Brent crude LCOc1 fell 27 cents, or 0.4%, to $68.12 a barrel by 0917 GMT. U.S. West Texas Intermediate (WTI) crude CLc1 dropped 11 cents, or 0.2%, to $64.69.

"The suspension will not do the bloc's economic and fuel recovery any favours," said Stephen Brennock of oil broker PVM. "The hope now is that Europe can get its sluggish vaccine rollout back on track."

Oil has recovered from historic lows reached last year as demand collapsed, partly due to record oil output cuts by OPEC and its allies. Brent reached $71.38 on March 8, its highest since Jan. 8, 2020.

The market gained support from American Petroleum Institute data, which according to trading sources said U.S. crude inventories fell by 1 million barrels last week. Analysts had expected a rise of 3 million barrels. nL1N2LE2LHEIA/S

Traders will be looking to the official U.S. Energy Information Administration report at 1430 GMT for confirmation of the API figures.

Investors are also looking to the results of the U.S. central bank's Federal Open Market Committee (FOMC), which ends its two-day meeting on Wednesday. nL1N2L82OT No policy shift is expected.

A rising dollar ahead of the Fed's announcement was also a headwind for oil, as a stronger dollar makes crude more expensive for other currency holders. USD/ Some analysts said prices could find support from bargain hunting.

"I remain confident that a wall of physical buyers will meet any material dips in oil prices," said Jeffrey Halley, analyst at brokerage OANDA.

(Additional reporting by Roslan Khasawneh in Singapore and Sonali Paul in Melbourne; Editing by Jacqueline Wong)

((alex.lawler@thomsonreuters.com; +44 207 542 4087; Reuters Messaging: alex.lawler.reuters.com@reuters.net))