Oil prices rebound from two days of losses

NEW YORK—Oil prices rebounded Wednesday from two days of steep losses amid volatility as traders mulled the prospects for demand and the effect of high prices on the global economic recovery.

New York’s main contract, WTI light sweet crude for May, finished at $107.11 a barrel, up 86 cents from Tuesday’s closing level.

In London, Brent North Sea crude for delivery in May leaped $1.96 to settle at $122.88 a barrel.

The market found buyers after the price of the New York benchmark lost almost 6.0 percent over the past two days.

Concerns about tight supplies spurred by revolts in the Arab world had driven crude oil prices recently above two-year highs.

But a warning from Goldman Sachs on Tuesday that investors should take profits from the overinflated commodities markets sent oil prices tumbling.

They recovered Wednesday despite another increase in US crude oil stockpiles, which rose by 1.1 million barrels last week, the US Department of Energy said in its weekly energy report.

The build-up was expected and investors focused on a spectacular plunge in gasoline stocks of 7.0 million barrels, 10 times more than expected by analysts surveyed by Dow Jones Newswires.

Traders keep close tabs on fuel inventories in the world’s biggest consumer of oil.

The New York market was somewhat volatile Wednesday, with the barrel price erasing all of its gains in the middle of the day after a slight strengthening of the dollar.

“There is reluctance on the part of traders to be too long above $120-125 because they know what the IEA said yesterday was true: above $100 there are questions,” said Adam Sieminski of Deutsche Bank.

The Paris-based International Energy Agency warned Tuesday of “real risks” that a sustained barrel price of more than $100 would work against the currently expected pace of global economic recovery.

“In Deutsche Bank’s view, above $120-125 there are serious questions about the impact of oil prices on the economy,” Sieminski said.

The benchmark New York contract was trading below $85 a barrel two months ago, in mid-February.

It soared by about 30 percent, reaching its highest level since September 2008 on Monday at more than $113 before heading south.