Oil steadied near $105 a barrel on Thursday, after surging almost $4 in the previous session on US government data showing a sharp drawdown in refined fuel stocks. US crude fell 18 cents to $104.65 a barrel, while London Brent crude was down 16 cents at $103.59 a barrel.
Gasoline inventories in the United States tumbled 4.5 million barrels last week, data from the US Energy Information Administration (EIA) showed, a much steeper fall than analyst forecasts of a 2 million-barrel decline.
Distillate stocks fell by 1.6 million barrels. The drawdown in refined fuels came as the world's top oil consumer the United States gears up for the summer vacation season, when fuel demand usually peaks.
US crude stocks jumped 7.4 million barrels last week, the largest build since March 2004, as imports rose and demand from domestic refiners remained low. "The US EIA's weekly petroleum status report contained mixed news from an oil market perspective, but was received bullishly by the oil market," said David Moore, a commodities analyst at the Commonwealth Bank of Australia, in a note.
Some analysts said the crude stock build, partially reflecting the abundant supply that the United States was getting, would eventually weigh down oil prices since demand was expected to remain weak given the sluggish US economy.
Also supporting crude's surge, the dollar fell after Federal Reserve Chairman Ben Bernanke conceded for the first time that the US economy might fall into recession in the first half of 2008.
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