LONDON (Reuters) – Oil steadied around $71 on Monday after surging nearly 2 percent at the end of last week, as refinery problems rekindled gasoline supply concerns and strong U.S. economic data helped offset credit market anxiety.
U.S. crude lost four cents to $71.05 a barrel by 5:12 a.m. EDT after soaring $1.26 on Friday. London Brent shed two cents to $70.60 a barrel.
“Prices have dipped slightly this morning but it is just a correction after Friday’s rally,” said David Moore, a commodities analyst at the Commonwealth Bank of Australia.
Analysts said fresh news of refinery outages in the United States would further tighten gasoline supplies, which unexpectedly fell by 5.7 million barrels in the week before.
Chevron said on Friday it expected some crude shipments to its Pascagoula, Mississippi refinery, one of the 10 biggest in the United States, to be cancelled or rerouted following a fire at a crude unit.
A shutdown of a 22,500 barrels per day (bpd) gasoline-making unit at an oil refinery in Big Spring, Texas, due to an equipment malfunction also helped boost prices of the auto fuel on Friday.
Prices were also aided by strong U.S. economic data released on Friday, which analysts said underlined the economy’s sturdiness before the subprime credit crisis unraveled, and would calm some jitters about the impact of the recent market turmoil on the wider economy.
Sales of new single-family U.S. homes unexpectedly rose in July and new orders for durable goods posted the biggest gains since September, reports from the Commerce Department showed on Friday.
More economic data due this week, including July existing home sales and preliminary second-quarter gross domestic product, could shed more light on the health of the economy.
Oil prices have slipped since reaching a record peak of $78.77 on August 1 due to concerns a global credit crunch could sap oil demand.
As prices fell in the week ended August 14, speculators on the New York Mercantile Exchange slashed net long positions in crude oil futures by half to just over 40,000 lots, Commodity Futures Trading Commission data showed on Friday.