By David Sheppard
Oil prices rebound; US distillates stocks at highest level in nearly 25 years.
Oil rose by more than $1 on Thursday to edge back above $61 a barrel, halting a six-session losing streak which has seen prices decline by 15 percent on concerns about the timing of any economic recovery. Prices hit a seven-week low just above $60 a barrel the previous day on bearish US oil data which highlighted how weak demand is in the world's largest energy consumer.
US diesel and heating oil stocks have swelled to their highest level in almost 25 years after jumping by 3.7 million barrels last week, data from the Energy Information Administration (EIA) showed.
US light crude for August delivery rose $1.01 a barrel to $61.15 by 0853 GMT, having lost more than four percent on Wednesday.
London Brent crude gained $1.24 to $61.67 a barrel.
"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 U.S. 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 15 percent drop in oil prices since the end of June was the longest and steepest decline so far in 2009. Prices had been rising since February, more than doubling from lows hit near $33 at the depth of the economic crisis as traders started to price in an eventual recovery.
But many analysts cautioned prices had gone ahead of the real economy, with unemployment still rising and global oil inventories mounting up.
The fragile state of the global economy dominated the first day of the annual G8 summit, with the US, 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 Organisation of the Petroleum Exporting Countries (OPEC) said consumption of its crude will 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 - 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. (Reuters)