Crude oil prices rebounded above US$69 a barrel on Wednesday as oil refineries in the United States boosted production rates to meet peak summer fuel demand.
US light sweet crude futures CLc1 rose 58 cents to US$69.14 a barrel, below record highs of US$75.35 hit in April. London Brent crude
LCOc1 gained 6 cents to US$66.98.
The US Energy Information Administration said in a report Wednesday that domestic crude stocks fell 900,000 barrels last week as refiners increased run rates by 1.7 percentage points to 92.7 per cent of capacity -- the highest level since before last year's hurricanes slammed into the Gulf Coast.
Analysts surveyed by Reuters had anticipated a decline of just 100,000 barrels on average.
"So steep was the recovery in US refining activity that US crude oil inventories dipped by nearly 1 million barrels," said Antoine Halff, analyst at Fimat in New York.
US petrol stocks rose 2.8 million barrels, nearly triple the 1.1 million barrels that analysts predicted and distillate stocks rose 2.1 million barrels compared with forecasts for a rise of 1.6 million barrels.
Oil had dropped more than US$3 this week as interest-rate fears triggered a sell-off in commodities and stocks.
Metals such as copper and gold steadied or gained on Wednesday after the cross-market slide, which struck as risk-averse investors feared a global move to tighter monetary policy will crimp demand. COM/WRAP
US data showed a larger-than-expected rise in May core consumer prices, fanning inflation fears. The burst in core prices over the past three months has been the most severe in more than 10 years, raising concerns interest rates will rise and slow economic growth.
Despite inflation fears, analysts said that the long-term oil supply outlook remains tight as Asian economic growth fuels rising demand. China, one of the engines of oil demand growth, posted year-on-year growth of 18.9 per cent in industrial output in May.
"We've been caught in the cross-fire of broader financial and commodity markets," said Mike Wittner, head of energy market research at Calyon Corporate and Investment Bank.
"It's been a bit gut-wrenching in recent days, but all signs are that oil fundamentals remain solid." But experts said global economic growth would have to slow considerably for long-term fundamentals to ease.
"Global growth is so strong that I think it probably will slow down at some point," said Mark Mathias of hedge fund Dawnay Day Quantum. "But (oil) demand will still grow. Fundamental data is still solid. Our view is that it is not a bad time to buy when you see the price below US$70." The persisting supply risks from Iran and the Atlantic hurricane season have stemmed losses.
Dealers are awaiting Tehran's formal response to incentives offered by world powers in an attempt to end the stand-off over its nuclear programme. The dispute has led to concerns that Iran may cut crude exports and impede supplies from the Gulf.
Spain said that Iran Foreign Minister Manouchehr Mottaki called the incentives "a step forward" in talks with his Spanish counterpart.
The 35-nation board of the International Atomic Energy Agency (IAEA) meets in Vienna on Thursday to debate the dispute, but no resolutions are expected. nL13763120
A fire at a Valero Energy Corp. refinery in Quebec also put the market on edge, though the company said the incident would have no significant impact on the plant's operations.
- REUTERS
Crude oil prices rebounded above US$69 a barrel on Wednesday as oil refineries in the United States boosted production rates to meet peak summer fuel demand.
US light sweet crude futures CLc1 rose 58 cents to US$69.14 a barrel, below record highs of US$75.35 hit in April. London Brent crude
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