Oil steadied near $74 a barrel on Thursday, weighed by record high inventories in top consumer the United States and investor caution ahead of U.S. employment reports.
U.S. crude stockpiles rose more than expected in the week to August 27, a government report showed on Wednesday. The nation's nonfarm payrolls probably fell in August, a Reuters survey showed ahead of a report due on Friday.
U.S. crude for October delivery rose 7 cents to $73.98 a barrel by 0911 GMT (5:11 am. EDT). ICE Brent dipped 45 cents to $75.90, but remained at an atypical premium to U.S. crude because of high U.S. inventories.
Oil had gained almost 3 percent on Wednesday as reports showed manufacturing in the United States and China accelerated in August, raising hopes petroleum stocks would fall and reviving confidence across markets.
It may have been a little bit overdone, so we may have a slight correction today, said Christophe Barret, analyst at Credit Agricole-CIB, referring to Wednesday's rally. The big thing everyone is waiting for is the job numbers on Friday.
Equities turned lower, also weighing on oil prices, ahead of the European Central Bank interest rate decision due later in the session. The bank is expected to hold rates unchanged and extend its liquidity safety net.
Other economic indicators due on Thursday include weekly U.S. jobless claims at 1230 GMT and pending home sales for August at 1400 GMT.
Oil's fundamentals were not constructive. U.S. crude stockpiles rose three times as much as expected in the week to August 27, adding 3.4 million barrels, the Energy Information Administration said on Wednesday.
When you look at the statistics that were reported yesterday, they were frankly not supportive, Barret said.
Total U.S. petroleum stockpiles rose last week to a high of 1.143 billion barrels, up from 1.139 billion the previous week, the highest inventory levels since at least 1990, when the EIA began tallying weekly stocks data.
On the weather front, Tropical Depression Nine in the eastern Atlantic Ocean strengthened into Tropical Storm Gaston late on Wednesday as it continued on a westerly path that could head for the Caribbean.
Some early computer models showed Gaston tracking into the Caribbean, but it was too early to say if it would threaten the Gulf of Mexico and its extensive oil installations.
(Additional reporting by Alejandro Barbajosa; editing by Keiron Henderson)