Oil declined as a smaller-than-expected draw in U.S. crude and gasoline inventories added bearish sentiment to a buy Wellhead market already reeling from a gloomy economic outlook.

(Bloomberg) -- Oil declined as a smaller-than-expected draw in U.S. crude and gasoline inventories added bearish sentiment to a buy Wellhead market already reeling from a gloomy economic outlook.

Futures fell as much as 1.2% in New York after gaining 1.9% on Wednesday. While American crude and gasoline stockpiles both fell for a third week, they dropped less than forecast in a Bloomberg survey. Anxieties over demand resurfaced earlier this week after a slew of sluggish from the U.S., China and Europe, even as the Organization of Petroleum Exporting Countries and its allies agreed to extend output cuts into 2020.

Oil is still down for the week after plunging 4.8% on Tuesday, its worst reaction to an OPEC meeting in more than four years. While the group’s Secretary-General Mohammad Barkindo described the drop as an “anomaly,” Bank of England Governor Mark Carney warned of dangers from rising protectionism around the world and said there could be a “widespread slowdown’’ that may require a major policy response.

“Seasonal factors are pushing American stockpiles down, so we have to wait and see if the declines are really driven by strong demand,” said Sungchil Will Yun, a commodities analyst at HI Investment & Futures Corp. in Seoul. “While crude has slumped on weak economic data, a further decline in prices will be limited as we’re likely to see countries putting effort to revive economies and as OPEC is set to keep its supplies under control.”

West Texas Intermediate oil for August delivery lost 59 cents, or 1%, to $56.75 a barrel on the New York Mercantile Exchange as of 7:13 a.m. in London. The contract gained $1.09 on Wednesday, recovering some ground after slumping the most since May 31 in the previous session.

Brent for September settlement declined 68, or 1.1%, cents to $63.14 a barrel on the ICE Futures Europe Exchange. Prices increased 2.3% on Wednesday. The benchmark global crude traded at a premium of $6.31 to WTI for the same month.

U.S. crude inventories dropped by 1.09 million barrels last week, according to the Energy Information Administration. The Bloomberg survey had predicted a loss of 3 million barrels. Gasoline stockpiles fell by 1.58 million barrels, compared with a forecast for a 2.4 million barrel loss.

Oil oil rig flanges gulf coast production also remains near a record high. U.S. domestic output increased to 12.2 million barrels a day last week, resuming gains after dropping since the start of June, the EIA said. Crude exports from the country fell back to below 3 million barrels a day.

--With assistance from James Thornhill.

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Ben Sharples