LONDON (Reuters) – Oil crept back towards $80 on Wednesday after three days of losses with investors expecting weekly U.S. data to show crude stocks declining further in the world’s top consumer.
U.S. crude climbed 44 cents to $79.97 a barrel by 0822 GMT, while London Brent crude rose 20 cents to $77.82.
Prices have fallen from last Thursday’s all-time high of $83.90 a barrel, which was fuelled by worries of supply outages from a storm in the Gulf of Mexico, a weakening dollar, U.S. interest rate cuts and an influx of speculative money.
The return of nearly all U.S. Gulf oil production following precautionary closures last week has pushed oil back below $80, but traders said confirmation of a draw in U.S. crude stocks later on Wednesday could reverse the sell-off.
“It’s all up to the inventory data, if stocks continue to draw down then prices will remain bullish,” said Tony Nunan, Risk Management Executive at Mitsubishi Corp.
A Reuters poll of analysts showed U.S. refiners probably slowed imports of crude oil last week, causing inventories to fall by 2.4 million barrels.
Distillate stocks, including heating oil, were seen rising by 1.3 million barrels and gasoline stocks easing by 100,000 barrels after the seasonal drop in gasoline demand and the end of autumn refinery maintenance.
U.S. retail gasoline demand slid to a three-month low last week, as travel slowed further with the end of summer holidays, MasterCard Advisors said on Tuesday.
Oil production from the Gulf of Mexico was nearly back to normal after stormy weather last week knocked out the biggest chunk of the region’s production in two years.
Energy companies were pumping crude at 96 percent of capacity as of 1630 GMT on Tuesday, the U.S. Minerals Management Service said.
Traders continued to keep an eye on weather in the Gulf as the U.S. National Hurricane Center said Tropical Storm Karen has formed in the eastern Atlantic Ocean. Forecasts did not show the storm hitting operations in the Gulf.