U.S. oil climbed above $77 on Wednesday, inching towards its all-time high, on forecasts for another weekly decline in crude stocks in top consumer the United States and a recovery in world share markets.
U.S. crude was up 57 cents at $77.40 a barrel by 1410 GMT after hitting $77.49, the highest since July 17, 2006. London Brent crude was up 58 cents at $76.32.
Stocks around the world bounced back sharply on Tuesday as volatile credit markets stabilized. Olivier Jakob, energy analyst at Swiss-based Petromatrix, said this pointed to a more supportive global environment for energy.
I think upward price pressures remain fairly strong, said David Moore, an analyst at Commonwealth Bank of Australia.
Statements from OPEC officials still do not point to an early increase in production and there are concerns of a relatively tight supply situation later this year.
OPEC, which pumps over a third of the world's crude oil, agreed at two meetings late in 2006 to cut supplies by a total 1.7 million barrels per day. Ministers meet again on September 11. Some have said they see no reason to change policy.
The market held cited support at $76, and we still look for demand on dips to this level, Barclays Capital technical analysts said. The focus is still higher.
The United States will release weekly fuel inventory data on Wednesday. Analysts are expecting a further 1.1 million-barrel decline in crude stocks, a preliminary Reuters poll found.
Gasoline stocks were expected to be up 700,000 barrels, with refinery capacity utilization rising 0.6 percentage point.
U.S. oil hit a record high of $78.40 in July 2006.
This year's Atlantic hurricane season has so far spared the United States' oil producing and refining region. The market is keeping a watchful eye on the progress of a gathering storm.
Atlantic activity is expected to increase during August, said Jakob of Petromatrix.
Tropical Depression number three is off the U.S. east coast and should drift towards Iceland causing no real threat to oil interests.