Oil prices were steady at around $59 a barrel this afternoon ahead of weekly US official data expected to show a drop in crude inventories but a rise in distillate stocks.
The mixed outlook has left traders uncertain of their next move, with prices in a $58-$60 a barrel range since Monday.
US light sweet crude for September delivery fell 15 cents to $59.05 a barrel, having gained 20 cents yesterday. London Brent crude shed 18 cents to $57.85 a barrel. Prices rebounded from a low of near $56 a barrel a week ago as dealers feared further disruptions to US supplies in the Gulf of Mexico from an unusually early Atlantic storm season.
The Gulf of Mexico is home to a quarter of US domestic production and key import terminals. The storm season, which lasts through November, has already cut about 6 million barrels of US Gulf output.
But expectations inventories of distillates - fuels such as diesel and heating oil, for which demand is growing quickly this year - will rise for the tenth time in a row tempered worries over tight supplies this winter.
Distillate stocks are forecast to show a rise of 1.7 million barrels last week, while crude inventories are seen falling 2.3 million barrels because of higher refinery runs and mild supply disruptions as a result of Hurricane Emily, which shut in Mexican output for a few days.
The Reuters survey of analysts also forecast an 800,000 barrel fall in gasoline stocks as peak summer demand whittles away at inventories that came near seasonal peaks in June.
The focus on US weather has overshadowed weakness in the latest batch of Chinese oil data, which showed implied oil demand from the world's second largest consumer rising only 0.7 per cent from last June, far below full-year estimates.
However, many analysts expect a rebound in growth in the second half of the year, pointing to an unexpectedly strong 9.5 per cent rise in second-quarter GDP and a retail prices increase
that should encourage refiners to sell more fuel domestically.