Oil steadied above $72 a barrel today, taking a breather after a rise of more than 2 per cent the previous day after data showed that U.S. crude oil inventories fell much more than expected.
The stock decline, pegged to slowing imports, came a day after data from the American Petroleum Institute showed a sharp build up in gasoline and distillate stocks -- a combination that analysts say could hurt the profitability of US oil refiners.
NYMEX crude for October delivery was down 4 cents at $72.47 a barrel, after settling up $1.58 yesterday, when prices also got support from a weak US dollar. ICE Brent was down 6 cents at $71.61.
Oil has more than doubled from this year's low of $32.70 hit on January 20th and is trading 51 per cent below a record high of more than $147 struck in July 2008. The market this year hit a high of $75 on August 25th.
The Energy Information Administration said yesterday US crude stocks fell 4.7 million barrels last week, far more than the forecast for a 2.4 million decline in a Reuters poll.
On Tuesday, the American Petroleum Institute had said crude stocks rose by 631,000 barrels last week, while distillate stocks, which include heating oil and diesel fuel, jumped by 5.2 million barrels, against a forecast rise of 1.3 million.
Analysts said although there were no strong fundamentals to lift oil above this year's high of $75 in the short term, a weakening dollar, buoyant stock markets and positive growth data from the United States would stem a big slide in prices.
After hitting one-year lows a day earlier, the US dollar stayed on the defensive on Thursday, as investors added long positions in commodity currencies.
Commodities and equities also gained after US industrial production rose a robust 0.8 percent in August, boosting sentiment towards riskier assets.
The Organization of the Petroleum Exporting Countries might need to cut its oil supply next year to match an expected fall in demand for the group's crude, an OPEC delegate wrote in a Kuwaiti newspaper yesterday.
Reuters