Oil prices edge higher in choppy trade

NEW YORK—Crude oil prices rose Thursday in choppy trade, rebounding slightly from the prior day’s sharp losses despite fresh signs of weakening demand.

On the New York Mercantile Exchange, the benchmark contract for light sweet crude for June closed at $98.97 a barrel, a gain of 76 cents from Wednesday’s closing level.

In London, Brent North Sea crude for delivery in June rose 41 cents to settle at $112.98 a barrel.

“Most of the news today was bearish, with the IEA revision downward of world oil demand,” said Andy Lipow at Lipow Oil Associates.

But over course of the day, “people felt that crude oil got undervalued,” he added.

New York’s main West Texas Intermediate contract had fallen as low as $95.25 before making a U-turn, finding support as it had last week at that threshold.

The session began with the bears in charge.

“The fall in oil price has been prompted by the ‘triple whammy’ of poor Chinese economic data, falling global stocks and the IEA energy demand downgrade,” said Emma Pinnock, a market analyst at energy consultancy Inenco.

The oil market had already plunged on Wednesday due to signs of faltering energy demand in the United States and China, the two largest economies.

On Thursday, the International Energy Agency cut its outlook for 2011 global oil demand growth by 190,000 barrels per day because of high oil prices and weaker recovery in rich countries.

The IEA said it had trimmed its 2011 forecast for global oil demand growth due to “persistent high prices and weaker IMF GDP projections for advanced economies.” It put total demand at 89.2 million barrels per day.

Oil futures also faced renewed selling pressure after the US Department of Energy’s latest weekly report on energy reserves Wednesday showed another increase in crude stockpiles and an unexpected rise in gasoline reserves.

The rises were a sign of softer demand in the world’s largest oil-consuming nation.

There were also concerns over oil demand in China, the biggest energy consumer. China’s central bank on Thursday said it would raise the amount of money that lenders must keep in reserve to reduce liquidity as authorities worry about rising inflation and housing costs.

The People’s Bank of China said it would raise its reserve requirement ratio by 0.50 percentage points, effective May 18 — the fifth such hike this year.