Oil prices drift lower as Europe weighs economic risks

NEW YORK, July 21 (UPI) -- Crude oil prices drifted lower in early Thursday trading after the European Central Bank said downside risks are lingering in the regional economy.

In its first formal meeting since the British vote in June to leave the European Union, the ECB said it was keeping its main interest rate at 0 percent, citing ongoing risks to sustained economic recovery.

"Headwinds to the economic recovery in the euro area include the outcome of the U.K. referendum and other geopolitical uncertainties, subdued growth prospects in emerging markets, the necessary balance sheet adjustments in a number of sectors and a sluggish pace of implementation of structural reforms," ECB President Mario Draghi said in his opening remarks Thursday. "Against this background, the risks to the euro area growth outlook remain tilted to the downside."

Crude oil prices drifted lower in early Thursday trading, reversing course after a rebound during the previous session after U.S. data show crude oil inventories levels were on the decline in part due to increasing demand.

The price for Brent crude oil declined 0.8 percent from the previous session to start the trading day in New York at $46.80 per barrel. West Texas Intermediate, the U.S. benchmark price, was down 0.7 percent to $45.40 per barrel.

Anthony Starkey, an analytics manager at S&P Global Platts, said U.S. data show few of the substantial swings necessary to pull prices higher.

"What we don't need right now is run of the mill, but outsized draws to give an indication that supply and demand are converging at the necessary pace to generate large stock drawdowns and warrant much needed higher prices for the upstream sector," he said in emailed remarks.

Prices broke through the $50 threshold in early June amid supply shortages sparked by wildfires in oil-producer Canada and militant threats in Nigeria, a member of the Organization of Petroleum Exporting Countries. Renewed economic pessimism surfaced in the weeks that followed the British referendum to leave the EU, with the International Monetary Fund revising its global growth forecast lower because of the vote.

Draghi said the regional economy was expected to be "mildly expansionary" this year and turn neutral through 2018.

"Incoming data point to ongoing growth in the second quarter of 2016, though at a lower rate than in the first quarter," he said.