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London: Oil steadied yesterday as traders balanced expectations for a drawdown in US gasoline stocks with lingering concerns over the health of the global economy.
Oil prices have come under pressure from fears of a slowdown in the world economy sparked by troubles in the US housing sector and China's move to raise interest rates in an attempt to cool growth.
"Concerns over global growth have proved the key price-setting influence of recent, undermining prices despite evidence of a tightening market," Barclays Capital said in a note.
Prices have recovered from a six-week low of $56.17 a barrel for US crude hit on Friday.
US crude for May delivery, the most actively traded contract, rose nine cents to $59.79 by 1545 GMT, with the expiring April contract up three cents at $56.62. London Brent climbed three cents to $60.55 a barrel.
Prices have found support from declining gasoline supplies in the United States.
"This is a gasoline-led market right now and people are waiting to see what the inventories are going to be tomorrow," said Chip Hodge of John Hancock Financial Services.
Weekly US government oil inventory data will be released today.
US gasoline was trading at $1.9635 just off a seven-month high of $1.9740 hit on Monday.
US gasoline stocks have dropped about six per cent since early February and were expected to decline further as maintenance and mechanical troubles cut refinery production by almost 15 per cent.
"The market is obviously concerned about the inventory data, which is expected to show a sharp fall in gasoline," said James Kim, analyst at Woori Investment and Securities.
In a Reuters poll, industry analysts expected the US data to show a 1.8 million-barrel drop in gasoline inventories, the sixth consecutive weekly draw.
Heating fuel stocks were also expected to decline by 1.1 million barrels. Crude oil inventories were seen rising by 1.2 million barrels on higher imports.
Last week Opec decided to keep current production restraints in place and keep close watch on world oil markets and the economy.
US Energy Secretary Sam Bodman said he was "not uncomfortable" with Opec's decision.
Stockpile boost
The Bush administration sent Congress its plan to more than double the amount of crude oil held in the US emergency petro-leum stockpile to 1.5 billion barrels.
In his State of the Union speech to Congress in January, President George W Bush called for boosting the capacity of the Strategic Petroleum Reserve to ensure the US market had sufficient backup supplies in case oil imports were cut off from unstable parts of the world.
"The United States' economic and national security are threatened by vulnerability to disruptions in world oil supply and volatility in oil prices," Bodman said in a letter accompanying draft legislation that was sent on Monday to the Senate Energy Committee.
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