Oil shoots back above $71

LONDON: Oil rebounded above 71 dollars per barrel on Wednesday, after sharp losses the previous day, as traders awaited the weekly update on energy inventories in major consumer the United States.

New York's main contract, light sweet crude for August delivery rallied 1.27 dollars to 71.16 dollars a barrel.

Brent North Sea crude for August delivery advanced 1.25 dollars to 70.55 dollars.

Later Wednesday, the US government's Department of Energy will publish its weekly report on US energy stockpiles for the week ending June 26.

Analysts polled by Dow Jones Newswires forecast that American crude stocks fell by 2.1 million barrels last week.

"The DoE's US inventory data is due to be released today with analysts currently expecting a fall in crude," said analysts at the John Hall Associates energy consultancy.

Prices had sunk on Tuesday from eight-month peaks after new data showed a plunge in consumer confidence in the United States, the world's largest energy consuming nation.

"Crude oil tumbled from an eight-month high as US consumer confidence declined in June, indicating lower fuel demand," said BetOnMarkets analyst David Evans.

"Oil prices are likely to continue to trade around the 70 dollar level, as traders are worried that the economy has not hit bottom," he added.

Many analysts expect that the rebound in crude prices, coming mainly on the back of investors looking for an alternative to equities, will be temporary amid fresh worries about US energy demand.

Figures released on Tuesday by the Conference Board, a business research group, showed that US consumer confidence sank in June as Americans fretted about the recession and vanishing jobs.

The Conference Board's consumer confidence index retreated to 49.3 points in June from a revised 54.8 in May, an eight-month high. Most analysts expected a much stronger reading of 55.3 points.

In early trading on Tuesday, Brent oil had struck 73.50 dollars -- the highest level since last October -- as the market was propelled by tensions in key crude producer Nigeria.

Oil prices have increased dramatically -- by 40 percent, or more than 20 dollars -- in the second quarter on rising confidence that the global slump is easing. New York crude closed at 49.66 dollars on March 31, which was the last day of the first quarter.