Oil prices climbed above $75 today, boosted by signs of higher energy demand, but the rally petered out as traders banked profits in line with investors on Wall Street.
Brent North Sea crude for July dipped three cents to $74.63 in late London trade after jumping above $75 earlier today. New York's main contract, light sweet crude for delivery in July, was up three cents at $74.58 a barrel, also after a brief foray above $75.
Oil prices began rallying on Wednesday, with sentiment lifted by recovering stock markets and fresh data pointing to a sustained economic recovery in the key US energy market.
A report by the US Department of Energy showed an unexpected dip in US petrol supplies of 200,000 barrels. Distillate stocks, including diesel and heating oil, fell 300,000 barrels in the week ending May 21.
Oil built on Wednesday's gains by surging over $2 yesterday as the euro rebounded against the dollar and global stock markets bounced higher. A weaker US unit makes dollar-priced crude cheaper for buyers using stronger currencies, which therefore tends to stimulate oil demand and push prices higher.
Crude oil prices sunk over $1 on fears the euro zone financial crisis could turn toxic for the global economic recovery. Fears that contagion from Greece's sovereign debt crisis could spread to other vulnerable euro zone members were heightened by the Spanish government's bailout of a regional savings bank, Cajasur, over the weekend.
Meanwhile, US President Barack Obama headed to Louisiana to view the oil spill response amid suspense over the latest bid to cap the massive leak in the Gulf of Mexico.
A US official cited progress in the 'top kill' effort while British energy giant BP said it could not immediately judge the success of the effort.
Obama was to spend just over three hours in the region, surveying efforts to cap and clean up the disastrous spill on his second visit to the state, a day after he pledged not to rest until the crisis was dealt with.
But while initial indications were positive from BP's latest attempt to plug the leak, the firm warned it would be two days before the results were clear.
