Washington: Oil prices fell below $70 a barrel Thursday after surging overnight on signs U.S. gasoline demand may be improving. Weaker equity markets and gains by the dollar helped push down oil prices.
By midday in Europe, benchmark crude for November delivery was down 78 cents at $69.83 in electronic trading on the New York Mercantile Exchange.
The contract jumped $3.90 to settle at $70.61 on Wednesday after the Energy Information Administration said U.S. gasoline stockpiles unexpectedly dropped 1.6 million barrels last week from the previous week.
Analysts had expected a jump of 1.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The EIA also said demand for gasoline over the four weeks ended Sept. 25 was 5.4 percent higher than last year.
"Gasoline demand continues to improve," Barclays Capital said in a report. "We see the global market adjustment as remaining on track for a slow and steady soft landing for both prices and quantities."
Barclays said it expects crude to average $76 a barrel in the fourth quarter and $85 next year.
Other inventory data was less encouraging. Crude supplies grew more than expected last week, according to the government report, and they have now swelled to 11.4 percent above what they were last year.
Analysts said a multitude of U.S. economic data to be released Thursday and Friday — weekly jobless claims, pending home sales, construction spending, auto sales and non-farm payroll data, among others — could push and pull on prices.
"We are not ready to have a conviction in any trends," said Olivier Jakob of Petromatrix in Switzerland. "Further violent moves can be expected but the recent ranges are likely to remain respected."
In other Nymex trading, gasoline for November delivery fell 1.97 cents to $1.7319 a gallon, and heating oil lost 2.23 cents to $1.8101 a gallon. Natural gas retreated 7.2 cents to $4.769 per 1,000 cubic feet.
In London, Brent crude fell 77 cents to $68.30 on the ICE Futures exchange.