Oil rose for the second day today, nearing $49 a barrel on support from Wall Street and bullish data on US oil inventories, although gains were tempered by weak demand data from major consumers.
American Petroleum Institute numbers released after the close of trade last night showed an unexpected fall in US crude stockpiles last week of 1 million barrels, raising hopes that Energy Information Administration data on Wednesday could break the pattern of large stock builds.
Comments from US Treasury Secretary Timothy Geithner that most US banks have adequate capital also soothed nerves that had been battered by a larger-than-expected writedown by America's largest bank on Monday that sent oil prices down 9 per cent.
But demand for oil remains weak, with data from China, Japan and South Korea underscoring this trend and OPEC member Iran saying the cartel may have to cut supply again in response.
US crude for June delivery rose 25 cents to $48.80 a barrel at 4.25am amid thin trading, with prices still below levels over $50 seen before Monday's equities-led plunge.
London Brent crude rose 18 cents to $50.00.
Oil prices have been stuck in a narrow band, with few convincing signs of a sustained demand recovery within sight.
“We see the oil market range bound between $45 and $55 in the near future. Oil bounced off $45 a few times," said Clarence Chu, a trader at US-based Hudson capital energy in Singapore.
Oil data for major Asian economies released on Wednesday showed crude demand is still weak, with March imports for China, Japan and South Korea all down from last year.
Crude imports for China fell 5.5 per cent, Japan imported 18.4 per cent less crude based on preliminary data, and South Korean imports fell 15 per cent.
But adding support to sentiment, a senior Chinese central bank official said today the world's number three economy had hit bottom in the final three months of 2008 and had showed positive signs of recovery in the first quarter this year.
Reuters