Singapore: Oil rebounded towards $61 a barrel on Thursday, correcting from a seven-week low hit on bearish oil data that outlined continued weak demand amid growing concerns about the pace of economic recovery.
A larger-than-expected rise of 3.7 million barrels in US distillates stocks last week left them at close to a 25-year high, data from the Energy Information Administration (EIA) showed, underlining weak demand for industrial transportation fuels.
US light crude for August delivery rose 56 cents a barrel to $60.70 by 8:00am, having lost more than 4% on Wednesday to settle lower for the sixth day in a row, its longest losing streak since mid-December, at $60.14.
London Brent crude gained 57 cents to $61.
“It’s no more than a mild correction from the earlier decline that reflected the EIA report,” said David Moore, commodity analyst with the Commonwealth Bank of Australia.
But he did not expect prices to fall much further, he added.
“There are still concerns about the outlook for demand, particularly in the US But much of the possible decline in oil prices has already happened. If we did dip below $60, you would probably see some people who might see it as a buying opportunity,” Moore said.
The EIA also reported a large 1.9-million-barrel rise in gasoline stocks, against a forecast for a lower 600,000 barrels build, ahead of the 4 July Independence Day holiday weekend, when summer travel traditionally peaks, suggesting reduced travel due to the economic crisis.
Oil prices have fallen some 18% from this year’s high of $73.38 hit in late June, more than double this year’s lows at below $34 hit in February, as hopes that world economies were on the brink of a quick economic recovery have petered out.
The fragile state of the global economy dominated the first day of the annual G8 summit, with the United States, Japan, Germany, France, Britain, Italy, Canada and Russia acknowledging there were still significant risks to financial stability.
Opec’s 2009 World Oil Outlook added to the gloom as it said world demand for oil may take years to recover from the slump in 2009 because of economic weakness and demand destruction.
The Organization of the Petroleum Exporting Countries (Opec) said consumption of its crude would not return to 31 million barrels per day (bpd), the level it averaged in 2008, until 2013.
Opec secretary-general Abdullah al-Badri said on Wednesday oil prices - now trading just above $60 per barrel - were “comfortable”, but were still below the $75 a barrel the producer group said at its May meeting could be achieved this year.