Oil prices inch lower after Wednesday's rally

NEW YORK, Aug. 4 (UPI) -- Crude oil prices drifted somewhat lower at the start of Thursday trading, balanced between a rare rate cut by the Bank of England and U.S. labor data.

Oil prices posted strong gains Wednesday after fits and starts for the week after the U.S. Energy Information Administration reported a drop in U.S. crude oil production, suggesting the market was tightening up somewhat.

Anthony Starkey, a lead manager at Platts Analytics, cautioned against too much optimism in weekly figures, noting that production in the Lower 48 actually remained flat, marking the first time since early March that production didn't drift lower.

"Given the spate of selling that crude has endured over recent weeks, a sizable gasoline draw and headline drop in total U.S. production is likely enough to keep the market supported in the short term, though bigger questions remain on the health of the global oil supply and demand picture," he said in emailed commentary.

Crude oil prices moved lower after Wednesday's strong rally. The price for Brent crude oil was down 0.7 percent to open in New York at $42.77 per barrel. West Texas Intermediate, the U.S. benchmark price for oil, was down 0.4 percent at the start of trading to $40.65 per barrel.

Some negative pressure emerged after the U.S. Labor Department reported an increase of 3,000 in first-time claims for unemployment, though at a seasonally adjusted level of 269,000, data show job prospects in the United States remain robust. Private payroll processor ADP reported this week companies were hiring more in July.

According to the Labor Department, gas-rich eastern U.S. and Great Lakes states were among those posting the largest increases in initial claims, with little movement for oil states like Texas and North Dakota.

Overseas, the Bank of England said it was cutting its bank rate for the first time in years as it works to meet the inflation target of 2 percent in the wake of the June decision to leave the European Union.

"Following the United Kingdom's vote to leave the European Union, the exchange rate has fallen and the outlook for growth in the short to medium term has weakened markedly," the bank said in a policy statement.