Oil rebounded towards $74 a barrel today, as buying stepped up in anticipation of a drop in US crude and petrol supplies, halting a slide caused by hopes for a Middle East ceasefire.
US light sweet crude for August delivery rose 41 cents to $73.95 a barrel by early this morning, paring a loss of $1.76 a day ago but well below the record of $78.40 last Friday. London Brent crude rose 61 cents to $74.97.
Oil prices sank yesterday in tandem with gold, silver and copper as fears over the risk of expanding Middle East violence eased, after Secretary of State Condoleezza Rice said the United States believed there should be a ceasefire between Israel and Hizbollah as soon as possible, "when conditions are conducive".
Petrol inventories are forecast to have fallen by 700,000 barrels, underpinned by robust demand during the peak of the US summer driving season.
Prices also drew support from China, which posted accelerated second-quarter growth and whose refineries processed a record volume of crude in June, implying a third month of double-digit growth in apparent fuel demand in the world's number two oil user.
The market is also paying attention to Atlantic weather, as the second tropical storm of what is expected to be a busy 2006 hurricane season formed yesterday, though it is not expected to become a hurricane nor threaten US Gulf oil and gas facilities.