Oil prices slipped further below $74 a barrel Thursday, struggling to hold on big gains the day before when an Asian and U.S. stock market rally buoyed investor confidence.
By early afternoon in Europe, benchmark crude for October delivery was down 34 cents to $73.57 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.99 to close at $73.91 on Wednesday.
Most major Asian stock markets rose Thursday, extending gains from the U.S. where the Dow Jones industrial average jumped 2.5 percent. Investors took heart from encouraging manufacturing numbers from the U.S. and China, signs the global economy may not slow in the second half as much as previous anticipated.
European stock markets, however, were mostly slightly lower on Friday.
Oil traders brushed off another big rise in crude inventories last week reported by the Energy Department on Wednesday. Some analysts say the increase in inventories reflects overproduction by U.S. refineries rather than weak demand.
"U.S. oil demand is growing at a healthy pace and incoming data is consistent with a picture of steady recovery," Barclays Capital said in a report. "The seasonal increase in U.S. refinery activity has proved to be much larger than usual."
Others said factors outside the oil market were still heavily influencing prices and were also less optimistic about the inventory figures.
"Market sentiment and financial market events are apparently still more important for the oil market than the fundamental data," said a release from Commerzbank in Frankfurt. "The bottom line of the (inventory) report is that too much rather than too little oil is being produced at the moment.
"Consequently, the price of oil should come under pressure again as soon as the tail wind from financial markets eases," Commerzbank said.
In other Nymex trading in October contracts, heating oil fell 1.07 cents to $2.035 a gallon and gasoline dropped 0.20 cent to $1.8871 a gallon. Natural gas for October delivery fell 1.4 cents to $3.748 per 1,000 cubic feet.
In London, Brent crude was down 57 cents at $75.78 a barrel on the ICE Futures exchange.
___
Associated Press writer Alex Kennedy in Singapore contributed to this report.
