BS: Oil steady near $US77 after sharp US inventory gain
LONDON - Oil was steady at around $US77 after falling the previous day on the biggest weekly increase in crude inventories for nearly two years in the United States.
US crude stocks surged 7.31 million barrels last week as imports jumped, government statistics showed, while the nation's gasoline and distillate stocks including diesel gained for the fifth and ninth consecutive weeks respectively.
However, rises in equities in European trading provided a prop to oil, following mild Thursday falls on most Asian bourses.
Carsten Fritsch, an analyst at Commerzbank in Frankfurt, said: "We have conflicting signals that keep oil in this narrow range.
Optimism in stock markets and the weaker US dollar is supporting prices.
Weaker US economic data, rising stockpiles and fears of a double dip in the US are weighing on prices."
Thursday's news of a mild fall in new US jobless claims gave a slight boost to oil prices after it was published at 2230 AEST.
This reduced but failed to wipe out earlier falls.
By 2330 AEST US crude for September was up 30 cents at $US77.30.
ICE Brent was 49 cents higher at $US76.55.
Oil has been trading within a $US70 to $US80 range for nearly two months.
The Organization of the Petroleum Exporting Countries (OPEC) has for the past year and a half expressed a preference for oil to remain stable at around $US75 a barrel, saying that price encourages investment to sustain and increase production capacity and does not threaten the economic recovery.
Stability
"In a crisis situation you need stability," managing director at Commodity Broking Services in Sydney Jonathan Barratt said.
"Crude is very stable. This suggests to me that the forces of supply and demand are at ease with each other."
Oil analysts including Michael Wittner from Societe Generale pointed out that total US product demand growth was robust at 3.4 per cent over the past four weeks from a year earlier, according to EIA figures.
But supply accumulation is outpacing consumption at a time when the US economy is recovering from the most severe recession of the post-war era.
The US economy kept growing overall in recent weeks, but unevenly and actually slowing in a few regions as housing markets softened after the end of a popular tax break, the Federal Reserve said.
Last week's gain in US crude stockpiles was the biggest since October 2008, according to statistics from the US Energy Information Administration, which published Wednesday's inventory report.
US weekly crude imports reached 11.12 million barrels last week, the highest level since August 2006.
Many analysts had expected total crude stocks to be lower on disruptions from Tropical Storm Bonnie as it approached the Gulf of Mexico last week.
But Bonnie dissipated at the weekend without damaging regional energy infrastructure, although some oil production was interrupted late in the week.
OPEC is meeting only half its promised cuts in oil supply this month, a Reuters survey showed on Thursday - the lowest rate of observance since the current targets were adopted in December 2008.
