Oil prices dropped slightly Thursday as traders responded to gains a day earlier caused by a report showing declining U.S. crude inventories.
Light, sweet crude for April delivery fell 18 cents to US$61.82 a barrel in mid-afternoon Asian electronic trading on the New York Mercantile Exchange.
April Brent crude gave up 23 cents to US$61.66 a barrel on the ICE Futures in London.
On Wednesday, prices hit a two-month high following a U.S. government report that stockpiles of gasoline and distillates, which include heating oil and diesel fuel, dropped last week by a larger amount than analysts had forecast.
Iran's persistent refusal to suspend its nuclear program has also been a driving force behind the energy market's advance.
The gains in the oil market came despite a big drop Tuesday in U.S. share prices on worries about an abrupt economic slowdown. The fall was triggered partially by a 9 percent drop in Chinese shares amid speculation that Beijing may take further steps to slow China's rapid growth.
Markets have since started to bounce back.
But early concerns that U.S. and Chinese fuel demand growth could slow were offset by the release of Wednesday's U.S. inventories report.
"The oil market has essentially brushed off the correction in the equities market and is focusing on the U.S. inventory report, which was quite bullish," said energy analyst Victor Shum, of Purvin & Gertz in Singapore.
U.S. crude inventories climbed 1.4 million barrels to 329.0 million barrels last week, the Energy Information Administration said Wednesday in its weekly report. But gasoline inventories fell by 1.9 million barrels to 220.2 million barrels, and distillate inventories fell by 3.8 million barrels to 124.5 million barrels. Both drops were a bit larger than most analysts were expecting.
Shum said, however, that the stock market and economic concerns had contributed to slow trading in the oil market.
"I think in the near term we can expect a lot of volatility in the oil market," Shum said, noting continuing concerns over Iran.
Iran ignored an IAEA deadline last week to halt its nuclear program. Iranian Foreign Minister Manouchehr Mottaki reiterated Tuesday that his country would never again suspend uranium enrichment, a move the United States insists on for any negotiations with Tehran, reports AP.
In other Nymex trading Thursday, natural gas futures fell 1.12 cents to US$7.275 per 1,000 cubic feet. Heating oil futures under the new April contract traded at US$1.7669 a gallon (3.8 liters), down 1.12 cents.
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