Oil was little changed at above $61 today, after gaining 3.4 per cent in the previous session, as investors remained cautious about the pace of global economic recovery despite positive growth numbers from China.
While better-than-expected gross domestic product (GDP) growth from China, the world's Number 2 energy consumer, should have been supportive of crude prices, analysts said persistent worries about underlying weak energy demand weighed on sentiment.
US oil for August delivery edged up 14 cents to $61.68 a barrel after gaining 3.4 percent yesterday. London Brent crude crept up 11 cents to $63.20.
China's growth rate shot up in the second quarter on the back of a surge in state spending and bank lending, boosting hopes the biggest emerging economy will lead the way out of the worst global downturn since the 1930s.
Annual gross domestic product growth accelerated in the second quarter to 7.9 per cent from 6.1 per cent in the first, beating analysts' forecast for a growth rate of 7.5 per cent and making it the best-performing major economy in the world.
While the news helped to power Asian shares to a one-month high, the rally was not mirrored in oil prices as investors needed more evidence to be convinced of an economic turnaround, analysts said.
A looming bankruptcy at US-based CIT Group, a lender to hundreds of thousands of small and mid-sized US businesses, also prompted investors to adopt a wait-and-see stance.
Oil's gains yesterday came after the Energy Information Administration (EIA) said commercial crude oil stocks fell 2.8 million barrels last week, against a forecast of a 1.6 million barrel drop from analysts polled by Reuters.
A rally in the equities markets, along with a weak US dollar, which traded near a one-month low against major currencies, also supported oil prices.
Analysts said investors will be keenly watching weekly US jobless claims data due to be released later, as well as the Philadelphia July business activity survey and the National Association of Home Builders July housing market index for more clues on the health of the world's largest economy.
Oil prices have lost 12 per cent this month and dropped to a near two-month low of around $58 a barrel earlier this week, on mounting worries over whether economic recovery will come soon enough to help spur flagging fuel demand.
Reuters