London:Oil rose above $60 a barrel on Wednesday, supported by data showing a fall in gasoline stocks and after strong company earnings lifted expectations for economic recovery.
US crude for August delivery rose 99 cents to $60.51 a barrel by 2:50pm and Brent rose $1.22 to $62.08.
The contract settled at $59.52 a barrel on Tuesday, adding to a decline that shaved 11% from the price last week in the steepest weekly fall since January.
European and Asian equities rallied on Wednesday, tracking gains on US markets after upbeat results from Goldman Sachs and Intel, but doubts lingered about the strength of any rebound and the implications for energy demand. “The financial factors are lifting oil prices,” said Carsten Fritsch, oil analyst at Commerzbank. “But they are not driven by strong fundamentals (of supply and demand).”
Weak demand for oil has generated big stockpiles and US motor fuel stocks have risen even though the summer driving season is well under way.
Distillate stocks, including diesel, are at their highest for nearly 25 years.
The oil market got a boost from a report by industry body the American Petroleum Institute late on Tuesday, which showed a drop in gasoline stocks, as well as in crude inventories.
But traders will be waiting to see whether US government data for release at 8:00pm will provide confirmation.
A Reuters survey of analysts predicted the figures would show rises in distillate and gasoline stockpiles and a fall in unrefined crude.
Economic data also scrutinised
As the quest continues for evidence of economic recovery in the top energy consumer and leading economy, investors were also expected to scrutinise the raft of economic data for release later on Wednesday.
It includes the weekly US mortgage market index, the US consumer price index and industrial production and real earnings for June.
The US dollar fell against a basket of currencies on Wednesday, but stayed in the narrow range it has traded since mid-June. A weaker dollar can make commodities denominated in the currency more attractive to investors.
News Nigeria’s main militant group had agreed a 60-day ceasefire was theoretically bearish for the oil markets, but traders had yet to be convinced it would translate into a more stable environment for oil production.
Doubts over the sustainability of any truce were amplified after Henry Okah, a Nigerian militant leader released by the government on Monday, told Reuters he believed other militants would keep attacking the country’s oil industry.