Oil was steady above $72 a barrel this morning, after rising more than 4 per cent the previous day, buoyed by industry data showing a steep drop in crude imports and stockpiles in top consumer the United States.
The release of US July leading economic indicators and weekly jobless claims - both of which are expected to be mildly positive - could provide further clues on the outlook for the world's largest economy and set the market's trading tone.
By 4.06am, US crude for September delivery was down 14 cents at $72.28 a barrel, off an earlier session high of $72.54. It had settled $3.23 higher at $72.42 a barrel yesterday. London Brent crude for October was down 34 cents at $74.25.
“The EIA report has been pretty bullish for the market, and will support sentiment in the near term,” said David Moore, commodity strategist with the Commonwealth Bank of Australia.
“But we expect prices to remain volatile, as the overall demand picture remains weak, and as equity markets and the dollar continue to play major roles in influencing trading direction.”
US crude stockpiles plunged by a whopping 8.4 million barrels in the week to August 14th - against analysts' forecasts for a 1.3 million barrel build - as imports dropped to the lowest level since September 2008 and refiners hiked runs, data from the US Energy Information Administration showed.
Gasoline and distillate stockpiles also showed bigger-than-expected declines. This confirmed the API data released late on Tuesday which showed a 6.1-million-barrel fall in US crude inventories.
The release of first-time claims for jobless benefits for the week ended August 15th at 12.30pm, and July leading economic indicators at 2pm, are expected to show a gradual, nascent recovery in the US economy.
Economists polled by Reuters forecast 550,000 new jobless claims filings versus 558,000 in the prior week, while July leading indicators are seen rising 0.7 percent, matching June's increase.
US stocks rose yesterday, shaking off a 4.3 per cent slide in China's equity market, while the dollar fell against the euro and a basket of currencies, as a rebound on Wall Street reduced safe-haven demand for the greenback.
China stocks, viewed by investors as a weathervane of risk sentiment, tumbled to a two-month low yesterday on disappointment that Beijing had not taken steps to prop up the market after the key index plunged 20 per cent from two weeks ago.
Reuters