PERTH - Oil climbed toward $107 a barrel on Wednesday, pausing from its 2.5 percent decline a day earlier, as forecast of a drop in U.S. crude stocks more than offset doubts about the U.S. government's financial rescue plan.
A dip in the U.S. dollar also lent support to oil prices.
U.S. light crude for November delivery rose 39 cents to $107 a barrel by 1:45 a.m. EDT, after settling down $2.76 at $106.61 on Tuesday. London Brent crude rose 42 cents to $103.50.
The losses on Tuesday followed a record surge of nearly 16 percent in the now-expired U.S. October crude contract on Monday. The U.S. Commodity Futures Trading Commission said it was reviewing the price jump to ensure trading was valid.
"While trading based on fundamentals instead of panic has yet to return to any market, crude oil traders appear to be digesting the latest supply issues," Jonathan Kornafel, Asia director of Hudson Capital Energy, said.
A Reuters poll of analysts ahead of weekly U.S. government inventory data due later on Wednesday forecast that crude stocks fell for the fifth week by 2.0 million barrels last week due to disruptions caused by Ike.
Distillate stocks were forecast to have fallen by 1.5 million barrels, with gasoline stocks expected to have dropped for the ninth straight week by 4 million barrels after Ike shut Gulf Coast refineries.
A slow recovery in oil and gas production in U.S. Gulf of Mexico, home to a quarter of U.S. output, also lent support to prices.
Oil jumped nearly 7 percent on Friday to cap its biggest three-day rally in a decade on expectations a $700 billion U.S. government bailout plan would put an end to the global financial crisis and support demand in the world's top energy consumer.
But the initial euphoria has given way to doubts amid concerns that political resistance could delay the rescue package.
Oil has gained 11.4 percent so far this year on geopolitical tensions between Iran and the West, supply disruptions in Nigeria and falling U.S. dollar, but is still 27 percent below the record price over $147 it hit in mid-July.
A dip in the U.S. dollar also lent support to oil prices.
U.S. light crude for November delivery rose 39 cents to $107 a barrel by 1:45 a.m. EDT, after settling down $2.76 at $106.61 on Tuesday. London Brent crude rose 42 cents to $103.50.
The losses on Tuesday followed a record surge of nearly 16 percent in the now-expired U.S. October crude contract on Monday. The U.S. Commodity Futures Trading Commission said it was reviewing the price jump to ensure trading was valid.
"While trading based on fundamentals instead of panic has yet to return to any market, crude oil traders appear to be digesting the latest supply issues," Jonathan Kornafel, Asia director of Hudson Capital Energy, said.
A Reuters poll of analysts ahead of weekly U.S. government inventory data due later on Wednesday forecast that crude stocks fell for the fifth week by 2.0 million barrels last week due to disruptions caused by Ike.
Distillate stocks were forecast to have fallen by 1.5 million barrels, with gasoline stocks expected to have dropped for the ninth straight week by 4 million barrels after Ike shut Gulf Coast refineries.
A slow recovery in oil and gas production in U.S. Gulf of Mexico, home to a quarter of U.S. output, also lent support to prices.
Oil jumped nearly 7 percent on Friday to cap its biggest three-day rally in a decade on expectations a $700 billion U.S. government bailout plan would put an end to the global financial crisis and support demand in the world's top energy consumer.
But the initial euphoria has given way to doubts amid concerns that political resistance could delay the rescue package.
Oil has gained 11.4 percent so far this year on geopolitical tensions between Iran and the West, supply disruptions in Nigeria and falling U.S. dollar, but is still 27 percent below the record price over $147 it hit in mid-July.
