Crude fell after staging a brief rally on Wednesday, as the boost from a drop in U.S. stockpiles and encouraging Chinese factory data gave way to growing investor risk-aversion.
Brent oil bounced off a two-year low and headed toward $96 a barrel on Wednesday and U.S. crude also rose as crude stockpiles fell unexpectedly and Chinese factory data offered signs of hope for the slowing economy.
U.S. crude oil inventories fell 1.4 million barrels last week, compared with an expected increase of 700,000 barrels, U.S. government data showed on Wednesday. A sharp reduction in refinery runs cut gasoline stocks to their lowest in nearly two years and pared distillate supplies ahead of winter. The data from the Energy Information Administration confirmed the American Petroleum Institute's report on Tuesday of a crude inventory decline.
Oil, however, surrendered gains as markets grew wary of weak U.S. data and growing fears about the first Ebola case in the country. Brent oil for November delivery probed levels near $96 a barrel, before dropping back to near $94, its weakest since June 2012. U.S. November crude rose to near $93 per barrel before shedding 40 cents to settle at $90.73, its weakest since April 23, 2013.
Growth in China's manufacturing sector held up in September but remained subdued. The Purchasing Managers' Index (PMI) came in at 51.1, just ahead of forecasts for a 51.0 reading and offering some relief to investors worried about slowing growth.
Despite Wednesday's gains, increasing global supply, weak European and Chinese growth and a stronger dollar remain bearish factors going forward. The dollar index rose slightly, weighing on oil prices after reaching a four-year peak on Tuesday.
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"Every time oil rises, it falls on fear of slowing economies and ample supply. The market is still looking for a bottom," said Gene McGillian, analyst, Tradition Energy in Stamford, Connecticut.
Analysts made the largest downward revision on their oil price forecast in almost two years, a monthly Reuters poll showed, with the marked weakness in the price of Brent seen persisting into 2015.
A sustained drop below $100 is a concern for some OPEC members, particularly Iran which on Friday called for a joint effort to support prices, and the group may debate whether to cut its output at a meeting on Nov. 27 in Vienna. Some analysts believe Saudi Arabia, OPEC's largest producer, could act unilaterally before then if prices continue to slide.