US West Texas Intermediate (WTI) crude futures fell 10 cents, or 0.3%, to $39.72 a barrel at 0148 GMT, trimming a 1.4% rise from Wednesday.
Brent crude LCOc2 futures for September fell 32 cents, or 0.8%, to $41.53 a barrel, paring Monday's 92-cent gain. Analysts had expected a 710,000-barrel drop.
KUALA LUMPUR, July 1 ― The ringgit opened higher against the USA dollar today after overnight crude oil prices jumped on a major draw in crude oil inventory reports.
Official inventory data from the US Energy Information Administration (EIA) is due out later on Wednesday.
Prices for later this year are likely to be capped, analysts said, as the world is awash with oil after the coronavirus caused demand for fuel to drop by around a third.
Improving global economic activity supported prices as well.
However, investors are cautious after a surge in infections in the United States and a warning from the USA government's top infectious disease expert that the number could soon double.
Optimism on Monday had been based on strong growth in USA pending home sales, bolstering belief that global fuel demand is rising steadily as major economies reopen after coronavirus lockdowns, while the Organization of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, comply with production cut commitments.
"Largely we are moving forward in the way of demand and not backward, despite the negative view of coronavirus cases rising", said Tony Headrick, energy markets analyst at CHS Hedging.
The 13-member grouping produced an average of 22.62 million barrels per day (bpd) in June after they agreed to cut output, a Reuters' survey found, down 1.92 million bpd from May's revised figure.
Clarksons Research estimated 218 million barrels of crude was held on tankers by June 26 from a peak of 290 million barrels in early May, while about 70.5 million barrels of oil products were stored versus a May peak of 100 million barrels.