Oil fell below $62 a barrel this morning amid lingering scepticism over the pace of a global economic recovery, but prices are on track to snap four straight weeks of decline to post a weekly gain.
Helped by a rally in the equities markets and some positive economic data, oil is on course to rise about 2.8 per cent this week, partially reversing last week's drop of 10.3 per cent, which was the highest weekly decline since early February.
US crude oil for September delivery fell 42 cents to $61.60 a barrel by 7.36am. London Brent crude fell 42 cents to $63.33 a barrel.
Oil's gains yesterday were helped by a rise on Wall Street following more upbeat corporate earnings and a report that showed strong economic growth in China, the world's second biggest consumer of energy.
The number of Americans filing for jobless benefits fell to the lowest level since January last week, a decline linked to upheaval in the auto industry, while a key regional manufacturing index slipped more than expected in July, reports showed on yesterday.
Oil prices remain down nearly $10 since early July - partially reversing last quarter's 40 per cent surge - amid lingering concerns about global energy demand, which has been contracting for the first time in a quarter century under the weight of the economic recession.
US government data this week showing a swelling in gasoline stockpiles in the week of July 10th despite the July 4th Independence Day holiday when the summer driving season typically peaks, remains a stark reminder for investors that demand in the world's top energy consumer is still tepid at best.
Nouriel Roubini, one of the few economists who accurately predicted the magnitude of the financial crisis, said yesterday the worst of the turmoil had passed, but emphasized the US would still need a second fiscal stimulus, possibly by the end of
this year, as the unemployment rate quickly approaches 10 per cent.
Reuters