LONDON (Reuters) – Oil recovered from early lows to trade above $72 a barrel on Thursday as concerns over a slowing U.S. economy overshadowed an unexpectedly steep drop in fuel stocks in the world’s top consumer.
Economic worries, the debt market squeeze and falling stock prices have knocked U.S. oil from an all-time high of $78.77 struck last Wednesday.
Analysts say further declines may be triggered by speculative funds moving out of energy and commodities to cover losses in equities and other markets.
U.S. crude was 2 cents down at $72.13 a barrel by 6:30 a.m. EDT, off lows of $71.66. London Brent crude was 5 cents up at $71.04, after falling as much as 59 cents early following a 81 cents drop in the previous session.
Traders said there was little direct impact from news of an attack by gunmen on Yemeni government buildings, a power station and police checkpoints, but reported some buying ahead of the U.S. market open.
“We would expect more of a drift until such time that a convincing bounce marks a bottom,” MF Global said.
U.S. crude and gasoline inventories fell sharply last week as crude imports slumped and refineries throttled back, government data showed on Wednesday.
“The inventory data was bullish but investors’ interests were obviously muted due to nagging worries about the health of the U.S. economy,” said David Moore of the Commonwealth Bank of Australia.
Gasoline inventories in the United States declined by 1.7 million barrels, below the lower end of the average range. Crude stocks dropped for the fifth consecutive week, by 4.1 million barrels in the week to August 3.
But refiners have yet to request extra barrels from Saudi Arabia, judging by September export allocations. Lifters of Saudi barrels in Asia and Europe say top exporter Riyadh will hold supplies steady next month.
Near record oil prices have sparked concern in Washington and Energy Secretary Sam Bodman said on Wednesday he plans to urge OPEC to agree to pump more when it meets on September 11.
But OPEC looks likely to resist the request.
Venezuela’s oil minister said on Wednesday the global oil market was well supplied and there was no reason for OPEC to increase production despite a recent surge in prices.
“There is enough oil in the market,” Rafael Ramirez told Reuters while visiting Uruguay.