Oil rebounds by over $1


Oil rebounded more than $1 today after two straight sessions of declines, as a surprise drop in gasoline stocks allayed concerns about weaker demand ahead of the peak summer driving season.

Prices were also supported by a softer dollar, but sovereign debt problems in Europe and weak US economic data from the United States kept investors on the edge.

Brent crude for July was up 61 cents at $110.60 a barrel by 6am after hitting an intra-day high of $111.08. U.S. crude futures gained 82 cents at $97.73 a barrel, after rising to as high as $98.00 earlier, up from a 12-week settlement low at $96.91 yesterday.

US crude stocks rose 2.7 million barrels last week, but gasoline stocks fell 676,000 barrels and distillates dropped 2.8 million barrels, American Petroleum Institute data showed.

A Reuters survey of analysts had forecast US crude inventories would be up for the fourth straight week, but only by one million barrels. The poll had also forecast an 800,000 barrels build in gasoline stocks.

The drop in gasoline stocks could signal that demand for the fuel picked up after prices fell last week for the first time in eight weeks, easing from highs of near $4 a gallon in April.

Supply worries stemming from geopolitical tensions also continued to support oil prices.

Libya's top oil official defected from Muammar Gadafy's administration and fled to neighbouring Tunisia, a Tunisian security source said.