Oil rose back above $80 on Wednesday, after three days of losses, with investors expecting weekly U.S. data to show crude stocks declining further in the world's top consumer.
U.S. crude climbed 58 cents to $80.11 a barrel by 0940 GMT, while London Brent crude rose 26 cents to $77.88.
Prices have fallen from last Thursday's all-time high of $83.90 a barrel, which was fuelled by worries of supply outages from a storm in the Gulf of Mexico, a weakening dollar, U.S. interest rate cuts and an influx of speculative money.
The return of nearly all U.S. Gulf oil production following precautionary closures last week has pushed oil back below $80, but traders said confirmation of a draw in U.S. crude stocks later on Wednesday could reverse the sell-off.
"It's all up to the inventory data, if stocks continue to draw down then prices will remain bullish," said Tony Nunan, Risk Management Executive at Mitsubishi Corp.
A Reuters poll of analysts showed U.S. refiners probably slowed imports of crude oil last week, causing inventories to fall by 2.4 million barrels.
Distillate stocks, including heating oil, were seen rising by 1.3 million barrels and gasoline stocks falling by 100,000 barrels after the seasonal drop in gasoline demand and the end of autumn refinery maintenance.
U.S. retail gasoline demand slid to a three-month low last week, as travel slowed further with the end of summer holidays, MasterCard Advisors said on Tuesday.
The market also came under pressure from profit taking as the third quarter drew to a close.
(Reuters)