Oil quickly slid $2 a barrel to under $80 yesterday after US energy department data confirmed a rise in crude stocks that beat expectations, but petrol demand figures helped stem the price decline.
Sentiment was also undermined earlier by concerns over the fragility of a global recovery.
US crude oil futures for May touched a low of $79.88 a barrel and by 1445 GMT were trading down $1.28 at $80.63. Crude futures have traded between $69 and $84 so far this year. London ICE Brent for May was down $1.13 at $79.57 after earlier dipping to a low of $78.90.
US crude stockpiles jumped 7.3 million barrels in the week ended March 19, the US Energy Information Administration (EIA) said, broadly confirming a 7.5 million barrel build reported by the American Petroleum Institute (API) on Tuesday. "The EIA data essentially mirrors that of API, with petrol being the exception. Larger-than-expected builds in crude oil reduced prices, not to ashes, but to $80," said Jay Levine of Enerjay, based in Portland, Maine.
Brad Samples at Summit Energy said the build mostly came from imports and refineries could process more oil as the US driving season got under way. "The big build all comes from imports, which rose to their highest level since September, 2009," he said. "Refinery utilisation rates have been rising along with import levels, and the rise will probably continue as we head toward the [US] driving season. We've been eating away at petrol stocks."
The EIA said petrol stocks fell 2.7 million barrels in the week ending March 19.