Oil was steady above $71 today after data showed a surprise drawdown in US crude inventories, pausing for breath after a rally in which the market has gained 13 per cent since late last week.
US crude, which lost 0.2 per cent a day earlier, found support earlier in the day after American Petroleum Institute data showed crude stocks unexpectedly fell 1.5 million barrels last week, adding to positive news from buoyant stock markets and a dollar that hovered near 2009 lows.
But later in the day, it gave up gains. US light, sweet crude was unchanged $71.42 a barrel earlier, while ICE Brent crude gained 17 cents to $74.45 a barrel. The market is still trading at less than half the record highs of over $147 it hit in July 2008.
"The market is reacting to the news from the API but I think in the next few months there will be a downward bias for oil.
Supplies are quite adequate to meet demand," said David Moore, commodity strategist at the Commonweath Bank of Australia.
Trading should remain subdued while the market waits to see if data from the US Energy Information Administration, due to be released later today, is in line with the API numbers.
Optimism that a potential turnaround in the global economy could lift sagging oil demand has helped send crude up from lows below $33 a barrel in December, with energy traders keeping an eye on equities markets for signs of an economic rebound.
"Equities is one of the key drivers for the oil market now and I feel oil could break $75," said Daniel Liu, an energy strategist at MF Global Singapore.
Japan's Nikkei average was almost flat on Wednesday, with investors taking a breather after the index set a 10-month closing high the previous day.
Pending sales of previously owned US homes rose at a faster-than-expected pace in June, advancing for the fifth month in a row, according to the National Association of Realtors, a real estate trade group.
Energy traders also were watching an area of thunderstorms in the Atlantic Ocean several hundred miles southwest of the Cape Verde Islands associated with a tropical wave. The US National Hurricane Center said it had less than a 30 per cent chance of becoming a tropical storm.