Oil retreated towards $77 today after posting its biggest percentage gain in four months a day earlier, as rising crude inventories in the United States damped optimism of a recovery in demand.
Crude stocks jumped by 4.7 million barrels last week, industry group the American Petroleum Institute (API) said in a report late yesterday.
US crude for March delivery fell 20 cents to $77.03 a barrel after soaring 3.8 per cent yesterday, the biggest gain for a front-month contract since Sept. 30. London ICE Brent crude for March slid 14 cents to $75.92.
However, oil is still nearly 48 per cent below its July 2008 high of more than $147 a barrel.
US equities rose for a second day yesterday after positive earnings reports from economic bellwether companies United Parcel Service and Emerson Electric. A rise in pending home sales also helped bolster stocks.
Monday's news that the Institute for Supply Management's index rose to its highest since August 2004 raised expectations of a strong recovery in US manufacturing.
US gasoline stocks were forecast to have risen by 1.3 million barrels in the week to January 29th and total distillate stocks, including heating oil and diesel, were projected to have fallen 1.1 million barrels.
But US oil consumption was still 2 per cent below year-earlier levels in the four weeks to January 22nd, the EIA said last week.
The API said gasoline stocks fell 1.2 million barrels and distillate stocks shed 1 million barrels. The government's Energy Information Administration (EIA) will release stockpile and demand statistics later today.
US crude fell below $73 a barrel on Friday, shedding more than $11 from a 15-month high of almost $84 on January 11th.
Reuters