Oil rebounds toward $60, awaiting fuel stock draw

Oil prices bounced back toward $60 a barrel on Wednesday, reversing losses as dealers braced for a likely draw in US fuel stocks amid robust demand growth from the world's biggest consumer. US light, sweet crude for May delivery was trading up 41 cents at $59.66 a barrel, while Brent crude was up 25 cents at $60.45 a barrel.
Oil slumped to a six-week low at the end of last week and fell on Tuesday as traders feared a US housing market slump and China's move to raise interest rates at the weekend could weigh on economic growth, dampening fuel demand.
But there's been little sign of this happening just yet, with US fuel stocks steadily falling ahead of the summer driving season, when gasoline demand peaks.
US inventory data due later in the day is expected to show a 1.7 million barrel draw in gasoline stocks the sixth decline in a row and a 1.3 million barrel decline in distillate inventories, their eighth consecutive draw.
Crude stocks were seen building by 800,000 barrels as rising imports compensated for a pick-up in refinery activity, but the main focus will be oil demand in the world's top oil user.
"Demand growth, though perhaps overstated to some degree in the weekly data, still continues to impress," said Martin King of First Energy Capital.
Gasoline futures, which soared to a seven-month high on Monday, bucked on Tuesday's crude gains to fall 0.8 percent on profit taking, despite expectations for the draw in stocks. They were trading up 0.74 cent at $1.9495 a gallon on Wednesday.
The oil market is also on alert for any signs that troubles in the US housing market will spill over into the wider economy, slowing demand for fuels. Data on Tuesday did little to illuminate the outlook, with the pace of US home construction up a sharp 9 percent but permits for future building down.
The US Federal Reserve began a two-day policy meeting on Tuesday, with supreme mortgage woes likely to weigh.
Despite those anxieties, many markets appeared resilient, with the Shanghai stock index whose fall several weeks ago triggered a global flight from risk rising to a record high.