Brent crude edged up towards $115 a barrel today, after falling more than a dollar in the previous session, supported by storm threats and uncertainty about US president Barack Obama's latest plan to revive the world's largest economy.
Brent for October delivery was on track for a weekly gain of more than 2 per cent, trading up 10 cents at $114.65 a barrel by 7.27am.
US crude oil fell seven cents to $88.98 a barrel and was set for a gain of more than 3 per cent this week.
Concerns over economic growth and tepid demand for oil remain the main pressure points for the oil markets, blunting bullish sentiment from Libya's civil war, hurricanes and a battered US dollar.
"The question for the oil market is demand destruction and how confident the consumer is, both of which are very uncertain," said Jeremy Friesen, commodity strategist at Société Génerale in Hong Kong.
"If European and US policymakers can find some compromise and willingness to work together before economics force their hand, then that is bullish for oil. But I think we will probably see the market grind sideways."
Mr Obama unveiled a $447-billion package of tax cuts and new spending to revive a stalled job market but he faces an uphill fight with Republicans.
Federal Reserve chairman Ben Bernanke also highlighted the elevated jobless rate and sluggish underlying growth at a speech yesterday, but disappointed investors by stopping short of laying out a plan for action at the central bank's policy-setting meeting this month.
The US dollar index barely reacted to Mr Obama's job package, trading down 0.4 per cent to 76.214.
Oil continued to find support from the busy 2011 hurricane season in the Atlantic and supply outages in Opec member Libya.
Tropical Storm Nate, the 14th named storm, was gaining strength and could become a hurricane today or tomorrow, the US National Hurricane Center said.
The tropical storm has prompted producers in the Gulf of Mexico to begin another round of evacuations of nonessential workers.
The US Energy Information Administration said commercial oil inventories fell nearly 4 million barrels last week, far deeper than the forecast for a 1.9 million barrel drawdown.
Inventories dropped as imports slid more than 1 million barrels per day with offloading hampered by Hurricane Irene's passage through the East Coast that also compelled refineries to cut utilisation rates by more than a quarter.
In Libya, the man tasked with running the country, interim prime minister Mahmoud Jibril, reminded his forces that the war was not over yet as the latest deadline for the surrender of pro-Muammar Gadafy towns loomed and fighters massed on both sides.
"The consensus is that with the Libyan civil war essentially over, market pressures are easing, but the reality is that we are at the peak point of Libyan stress - without crude production, but with high imports to meet internal fuel needs," analysts at J.P. Morgan said in a research note.
Reuters
