NEW YORK – Oil prices bounced higher Thursday, with speculative buyers attracted by a 15 percent slide since last week that was triggered by rising U.S. inventory levels.
U.S. crude oil futures settled up 91 cents to $51.13 a barrel on the New York Mercantile Exchange (search) after falling as low as $49.75, the first time below $50 in seven weeks. Brent crude for May which expires later on Thursday, rose 43 cents to $50.91 a barrel.
"There was a lot of short-covering around $50," said Marshall Steeves, analyst at Refco. "We'd come off sharply in a short period of time, so an upward move was due."
Oil prices are still down about 12 percent since peaking last week over $58 as swelling stockpiles in the world's largest energy consumer countered worries over rising global demand.
U.S. government data released Wednesday showed a ninth straight weekly increase in crude inventories to their highest since the summer of 2002 as imports remain strong.
Adding to pressure, Saudi Arabia told Asian refiners and majors this week it would boost daily supplies by half a million barrels in May, sources said.
The International Energy Agency (search) forecast that China's oil demand growth was also slowing from last year's fast pace.
Despite recent losses, prices are still up nearly 20 percent from the start of the year, with speculative players still seen keen on energy markets.
The world's major oil exporters have been slow to bring on spare production capacity, leaving dealers concerned that an unexpected disruption could cause a shortage.
A top White House economic adviser said on Thursday the U.S. economy is on track for solid growth this year despite the "headwinds" it faces from lofty oil prices.
"Although the recent rise in crude oil prices is creating headwinds for the economy, we do not expect it to stand in the way of continued expansion," White House Council of Economic Advisers Chairman Harvey Rosen said.
Middle East Gulf producers are eager to raise output to encourage stock-building in the coming months, creating a buffer for strong demand later this year, but OPEC members Nigeria, Algeria and Venezuela have said more oil was unwarranted.
With oil prices now almost $5 below the cartel's $55-a-barrel threshold for triggering a second increase in production, opposition to the Gulf moves could intensify.
The Organization of the Petroleum Exporting Countries (search) raised output limits by 500,000 barrels per day (bpd) in March to 27.5 million bpd, leaving room for a second rise if oil prices remained high.