Oil attempts rebound as US energy reserves slide

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Oil prices rebounded on Wednesday, reversing earlier losses after news that US energy stockpiles fell across the board last week, suggesting strengthening demand.

New York's main contract, light sweet crude for December, jumped to 87.49 dollars per barrel, before pulling back to 87.03 dollars, up 31 cents from Tuesday's closing level.

London's Brent North Sea crude for December rallied to 88.96 dollars, before pulling back to 88.36 dollars, up three cents.

Oil fell on Tuesday in profit-taking, snapping a six-day winning streak, after New York struck 87.63 dollars -- its highest level since early October 2008 -- on the back of the weak US currency.

However, the market bounced back Wednesday after the US Department of Energy (DoE) said US crude inventories tumbled 3.3 million barrels in the week ending November 5.

That confounded market expectations of an 800,000-barrel increase, according to analysts polled by Dow Jones Newswires.

"Oil prices rebounded ... and rose above 87 dollars per barrel, supported by a bullish report which showed a large drawdown in crude, gasoline (petrol) and distillate oil inventories," said analyst Myrto Sokou at the Sucden brokerage in London.

"It was the report that ... improved (market) sentiment ahead of the G20 meeting later this week."

The DoE said gasoline stockpiles slid by 1.9 million barrels, more than double forecasts for a 900,000-barrel drop.

Distillates, which include diesel and heating fuel, slumped five million barrels. Analysts had pencilled in a far smaller drop of two million barrels.

Oil also won modest support from better-than-expected US new jobless claims data which showed a fall of 24,000 to 435,000 in the week ending November 6.

That was well below the 450,000 expected by most economists and the lowest level since early July, when claims fell to 427,000.

Meanwhile, traders awaited the Group of 20 summit which begins in Seoul on Thursday.

Leaders of the G20 biggest advanced and emerging-market economies will begin two-day talks to address global economic imbalances linked to trade and currency tensions.

© 2010 AFP

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