Oil steadied near $64 today after losing more than $2 a barrel this week as investors grew more convinced high energy bills were crimping consumption and Washington offered to tap emergency reserves.
But some analysts argued demand for oil remained strong and that a bull-run could resume as tight supplies of winter fuel are threatened by the closure of hurricane-battered US refineries and strikes by oil workers in France.
A dozen refineries accounting for 18 per cent of US total capacity remained shut after hurricanes Rita and Katrina, a daily loss of more than 1.3 million barrels of gasoline.
Washington said last week up to 15 per cent of US refining capacity could be out for at least another couple of weeks. "The potential for product shortages to develop remains sever," said Barclays Capital.
"We see limited further downside for crude oil with a very solid floor now appearing to have been established for WTI in the low $60s, whilst continuing to highlight signficant upside risk for products."
US refinery outages coincided with general strikes in France, a major fuel exporter, which have hit its refineries. A two week-long strike over wages had already closed Total's 328,000 barrel-per-day (bpd) Gonfreville refinery in northern France, the country's biggest.
Oil has eased some way since a record $70.85 hit in the wake of Katrina at the end of August. But evidence is mounting that current prices, still historically high, are starting to dent consumer confidence.
The Bank for International Settlements (BIS) said today that high oil prices would slow the rate of economic growth around the world.