Last week's gasoline demand increased more than 4% from the previous week to reach the highest level in three months, the Energy Information Administration reported Wednesday. Average gasoline demand over the past four weeks was 0.5% higher than a year ago.
Crude for October delivery gained 11 cents, or 0.2%, to $68.16 a barrel on the New York Mercantile Exchange. Crude had hit $75 a barrel in the past month, the first time in 10 months, before pulling back.
"Gasoline demand appears to be rebounding at the end of the summer-driving season," said analysts led by Barbara Lambrecht at Commerzbank in a note. "This may have helped the oil price to return to $68 a barrel."
Also moving crude's trading, U.S. stocks moved mostly higher after data showed the number of people filing for initial state unemployment benefits fell last week.
In its weekly petroleum report, the EIA said total petroleum products supplied, regarded as an implied gauge of demand, rose 1.2% to 19.7 million barrels a day, with daily gasoline demand jumping 4.1% to 9.48 million barrels, the highest since the week ended May 22.
Higher gasoline demand resulted in a sharp drop in U.S. inventories. Still, gasoline inventories were in the upper half of the average range for this time of year. See Wednesday's story.
Despite recent declines in crude and gasoline inventories, Phil Flynn, a senior market analyst at PFGBest, said that "oil is getting heavier and heavier as the market is heading into the weakest demand period of the year with more than ample supply."
Also in energy trading, October reformulated gasoline slid 0.6% to $1.7981 a gallon. October heating oil lost 0.4% to $1.7577 a gallon.
October natural gas fell 0.6% to $2.698 per million British thermal units.
U.S. natural gas inventories rose 65 billion cubic feet in the week ended Aug. 28, in line with analysts' expectation, the EIA reported Thursday.
At 3,323 billion cubic feet, stocks were 489 billion cubic feet higher than last year at this time and 501 billion cubic feet above the five-year average.
The United States Oil Fund (USO 35.31, +0.13, +0.37%) gained 1%, and the United States Natural Gas Fund (UNG 9.16, -0.29, -3.07%) fell 3.8%.
In economic news Thursday, the number of people filing for state unemployment benefits for the first time fell by 4,000 to a seasonally adjusted 570,000 last week, the Labor Department reported.
The figures come one day before the government reports on the August employment data. Economists surveyed by MarketWatch are looking for another sizable job loss of 250,000. The unemployment rate is expected to rise to 9.5%. See related story.
