By Barani Krishnan
NEW YORK (Reuters) - Oil prices rose in choppy trade on Thursday, snapping two days of sharp losses, after data showed a fourth weekly drawdown in U.S. crude stocks.
The U.S. Energy Information Administration (EIA) said crude oil inventories fell by 2.8 million barrels last week, ahead of Monday's Memorial Day holiday, which unofficially kicked off the peak summer driving season in the United States. [EIA/S]
Going by EIA data, it was a fourth straight week of declines in domestic crude stocks.
The draw was well above the decline of 857,000 barrels forecast in a Reuters survey. Industry group American Petroleum Institute, meanwhile, estimated a build of around 1.3 million barrels last week. [API/S]
Despite that, oil bulls could barely push the market higher right after the EIA data. U.S. crude was down most of the day and Brent was only up slightly, both rallying just minutes before the close.
More From This Section
U.S. crude settled up 17 cents, or 0.3 percent, at $57.68 a barrel, after plumbing a one-month low of $56.51 earlier.
Brent settled at $62.58, up 52 cents, or nearly 1 percent. It had fallen to a six-week low of $61.24 during the session.
Oil prices had fallen about 3 percent in the past two sessions on the strength of the dollar.
"My feeling is that demand for oil is growing as expected as we head into the summer, and if we can manage the headwinds posed by the strong dollar, we should be able to maintain an upward trajectory for prices," said Phil Flynn, an analyst at the Price Futures Group in Chicago.
Some attributed the price weakness earlier in the day to doubts that big weekly drawdowns in U.S. crude would continue for long. They cited the slowing pace in U.S. oil rig declines, which signaled more imminent supply that would add to the global oil glut.
"To me, I need to see more of these draws each week," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut. "Otherwise it could be just the case of higher demand ahead of a holiday weekend that goes away once that period is over."
Aside from U.S. crude, data showed price differentials for UK-traded crude also weakening from a supply glut. Prompt cargo for North Sea Forties traded on Thursday at the lowest level since December 2008, a sign of a market struggling to absorb surplus barrels.
(Additional reporting by Christopher Johnson in London and Henning Gloystein and Florence Tan in Singapore; Editing by Bernadette Baum and Jonathan Oatis)