Oil rose above $74 a barrel yesterday, bouncing from earlier losses, as the euro extended gains against the dollar on hopes for a bailout for Greece.
US crude futures rose 46 cents to $74.21 a barrel by 1123 GMT, having fallen to as low as $73.18 earlier. ICE Brent crude futures were up 24 cents at $72.37.
The euro extended gains against the dollar after a German coalition sources said the government was in intense talks about possible aid to debt-stricken Greece.
"The euro/dollar sees mixed trends as the markets await confirmation of a possible bailout of Greece by other eurozone member states. After initially weakening yesterday morning, the eruo has firmed a little and oil is likely moving in sympathy," said Harry Tchilinguirian, senior oil analyst with BNP Paribas.
Still, he said the worries over weak oil demand would cap oil prices. Crude stocks in the United States, the world's largest oil consumer, increased by 7.2 million barrels to 337.6 million barrels in the week to February 5, industry group American Petroleum Institute (API) said late on Tuesday.
The increase in crude inventories exceeded analysts' expectations for a 1.5 million barrel rise.
The release of official data from the US Energy Information Administration (EIA) has been delayed to Friday because government offices were closed yesterday due to a snow storm.
"The further fall of the refinery utilisation is worrisome," said Eugen Weinberg, commodities analyst with Commerzbank.
The API data showed the refinery utilisation rate fell to 77 per cent from 78 per cent in the previous week and from 81.9 per cent in the same week a year ago.
"It is the lowest level since February 1987, without hurricanes, pointing to still very fragile oil demand in the United States," said Weinberg.
Crude prices are down nearly eight per cent this year to stand at about half their July 2008 high of more than $147 a barrel. Further pressure came from China and a stronger dollar.
Chinese crude imports slid in January, down to 4.03 million barrels per day from their December peak of 5 million bpd, although they were still up 33 percent on the year. Net fuel exports from China were about 160,000 tonnes, customs figures showed.
Olivier Jakob with Petromatrix said the crude import volume was the lowest level since May last year.
"With product exports more than double the levels of a year ago, China has turned for the second month in a row into a net exporter of petroleum products," he said in a research note.
The Opec, responsible for 40 per cent of global crude supplies, is set to publish a monthly report with forecasts on supply and demand. The group will next meet on March 17 in Vienna.
Brent crude oil for March settlement was at $72.15, up two cents, at 10:45am on the London-based ICE Futures Europe exchange, after falling as much as 64 cents, or 0.9 per cent, to $71.49 a barrel.
Keep up with the latest business news from the region with the Emirates Business 24|7 daily newsletter. To subscribe to the newsletter, please click here.
Follow Emirates 24|7 on Google News.