Oil was steady under $62 a barrel on Thursday, after rallying to a six-month high on Wednesday, as government data showed a steep drop in U.S. crude and gasoline stockpiles ahead of the summer driving season.
The market will study weekly U.S. jobless claims and April leading indicators due later in the day for more clues on the pace of demand recovery in the world's top energy consumer.
U.S. crude for July delivery fell 32 cents to $61.72 a barrel by 0740 GMT (3:40 a.m. EDT). It had settled at $62.04 a barrel, before trading up to a six-month high of $62.26 in post-settlement activity. London Brent was down 23 cents at $60.36.
The market is in a technically bullish mode right now -- $62 was one target, and now that we've attained that, a new range of $55 to $62 is in play, and we're now trading at levels people were predicting for the end of the year, said Tony Nunan, risk manager at Mitsubishi Corp in Tokyo.
But we might see a sell-off toward the end of the month as the driving season in the U.S. begins only in June after Memorial Day, and if the reality of summer demand is not as strong as the market has anticipated.
Crude oil and gasoline stockpiles in the United States tumbled sharply last week, according to the U.S. Energy Information Administration's report on Wednesday, with crude declining 2.1 million barrels and gasoline falling 4.3 million barrels.
Data due later is expected to reflect a mildly positive outlook for the U.S. economy.
First-time claims for jobless benefits for the week ended May 16, due at 1230 GMT (8:30 a.m. EDT), are expected to slip to 630,000 from 637,000 in the previous week, a Reuters poll of economists showed.
U.S. leading indicators -- due at 1400 GMT (10:00 a.m. EDT) -- are forecast to rise 0.8 percent in April, compared with a 0.3 percent decrease in March, according to another survey of economists by Reuters.
JPMorgan has raised its forecast for 2009 U.S. crude prices to $55.63 a barrel from $49.38, on expectations of economic recovery later this year.
The bank said in its monthly energy report that it had hiked its 2010 forecast by an even larger $10.00 to $67.50 a barrel.
While it may seem at odds with recent demand data and high levels of global inventories, we believe the economic outlook is improving and a second-half economic recovery, perhaps more vigorous than even we foresee, is on the cards, it added.
Oil has been on an upward trend since mid-April in an equity-led rally. Prices have recovered from below $33 in December after a plunge from record highs above $147 in July.
Oil was also boosted by the U.S. currency's weakness. The dollar fell to a two-month low against the yen on Thursday, extending the previous day's slide when optimism about the U.S. economy reduced safe-haven demand for the greenback.
Further price support came from unrest in OPEC member Nigeria, Africa's top oil and gas exporter.
Shooting broke out in the Nigerian oil port city of Warri on Wednesday following days of military helicopter and gunboat raids on militant camps in the surrounding creeks.
Top Italian oil and gas company ENI SpA
The Organization of Petroleum Exporting Countries, which has agreed to cut 4.2 million barrels per day of output since September in a bid to prop up oil prices, will meet again on May 28 to decide output targets.
But OPEC has no reason to cut production again at the meeting, Algerian Energy and Mines Minister Chakib Khelil said this week.
(Editing by Clarence Fernandez)