Oil rises towards $70 as U.S. demand recovers
LONDON (Reuters) – Oil reversed early losses on Wednesday to rise back toward $70 a barrel, as data showing oil demand is recovering in the United States outweighed doubts about the strength of the global economy.
By 1425 GMT (10:25 a.m. EDT), U.S. crude for September delivery was up 26 cents at $69.45 a barrel.
London Brent crude for October was down 1 cent at $72.34.
Prices had fallen earlier on Wednesday, hitting a low of $68.05 after a near 5 percent slump in Chinese shares sent doubts rippling through global markets about the strength of the world economic recovery.
But a report from the American Petroleum Institute (API) showing U.S. oil demand is now down 3 percent year-on-year, compared with an average decline of around 6 percent in the first half of 2009, saw prices reverse higher.
“I think these (demand) changes are reflective of an improving economy, but one must be cautious because these changes are versus year ago weak numbers,” said API chief economist John Felmy.
A drop in the U.S. dollar against the euro also boosted prices, as dollar-denominated commodities like oil become cheaper for holders of other currencies.
Price movements were limited as traders awaited the release of weekly U.S. fuels stocks data from the Department of Energy, due at 1430 GMT (10:30 a.m. EDT). Less comprehensive data from the API on Tuesday showed a surprise drop in U.S. crude stocks.