SINGAPORE (Reuters) - U.S. crude futures rose a third of a percent on Thursday after slipping 2.3 percent a day earlier on a larger-than-expected build in U.S. crude inventories.
A weaker dollar, record gold prices, copper at a 14-month peak and a 2.3 percent rally in Japan's main equity market .N225 did little to counter worries about rising inventories and slow demand.
"Oil is in a range. It will stay there for the rest of the year, and probably through the first quarter of 2010, unless we see something geopolitical come from left field -- maybe from Iran," said Peter McGuire, managing director of CWA Global Markets.
Oil has traded in a $14-range this quarter, which narrowed to $9 last month, bounded by a low $72.39 when panic over Dubai's debt situation sent commodities reeling for a few hours, and $81.06 as the upper threshold.
NYMEX crude for January delivery rose 30 cents to $76.90 a barrel by 0344 GMT, after settling down $1.77 at $76.60 on Wednesday.
Brent crude was up 48 cents at $78.36 per barrel.
Wednesday's losses, which stemmed a two-day advance, came after U.S. government data showed crude stocks rose 2.1 million barrels last week, topping the forecast for a 400,000 barrel rise in a Reuters poll.
Gasoline futures slumped on Wednesday as the data from the U.S. Energy Information Administration showed gasoline stocks increased much more than forecast. Distillate stocks fell 1.2 million barrels, against the forecast for a 300,000-barrel drop. "Markets finally are swinging focus back to the supply dynamic. The inventories were another warning shot across the bow," said ANZ's senior commodities analyst, Mark Pervan.
Adding to the concerns over rising supply, Russia set a fourth consecutive monthly record for crude oil output in November to retain its position as the world's largest producer.
Pervan added: "What might rescue oil from a big sell-off is a seasonal demand pick-up and the healthy array of long and short positions in the market, so crude is not heavily overbought."
Traders said widening spreads between nearby prices and those further in the future were also a cause for concern.
"The spread between the first and second months has blown out to levels last seen before the major sell off. Something is up," a trader in Sydney said. Front month crude traded $1.63 below the second month contract.
"At this time before expiry, the spread should be 30-40 cents. Someone is selling near-dated oil, I am guessing on worries demand in the United States is falling of a cliff."
