Benchmark oil prices edged upward Monday as traders focused on signs that the U.S. economy is in better shape than previously thought after a moderate sell-off earlier in the day to lock in profits.
While gasoline prices were down marginally, concerns of possible supply shortfalls also acted to shore up the crude market.
Light, sweet crude for October delivery rose to just less than $72 a barrel on the New York Mercantile Exchange.
The U.S. Commerce Department said Friday sales of durable goods and new homes rose in July, suggesting the economy may not be slowing as much as investors feared. Also, a report that Chevron's Pascagoula, Miss., refinery was canceling crude purchases supported prices at the end of last week on renewed worries about gasoline inventories.
Earlier in the year, concern over low gasoline stocks during the U.S. summer driving season were a major factor keeping crude oil prices high. And now, when traders normally expect to see gasoline use dropping off gasoline stockpiles are dropping off in the midst of a refinery outage and high demand.
The U.S. Energy Department said in its weekly report last Wednesday that over the four weeks to Aug. 17 the country's gasoline demand averaged over 9.6 million barrels a day, 0.6 percent above the same period last year. Analysts at Barclays Capital noted that implied gasoline demand of 9.726 million barrels a day for the fourth week -- a weekly record.
The Mississippi refinery, Chevron's largest in the United States, has been operating at half-capacity after being damaged by a mid-August fire. Energy News Today, a trade publication, reported last week that Chevron canceled a 550,000-barrel Venezuelan crude shipment. Chevron would not confirm that specifically, but said the company's refinery is running less crude and that "we are working closely with our crude suppliers and expect some crude shipments may be canceled or rerouted to other refineries in our global network."
The news raised some speculation that gasoline prices may again become a key driver of crude oil prices.
After the large decline in U.S. gasoline inventories reported last week amid record demand, the gasoline market is "going to remain highly sensitive to any refinery problems," said Linda Rafield, senior oil analyst at energy information provider Platts.
Vienna's PVM Oil Associates noted that "inventories of ... motor fuel fell by a massive 5.7 million barrels, and are now 3 percent below the five-year average.
"This was attributed to weakening imports, which were down 30 percent, year-on-year," it said.
Earlier last week, before the inventory report, crude oil and gasoline prices made steep declines as Hurricane Dean missed key oil facilities in the Gulf of Mexico.
Uncertainty in the credit markets also weighed on energy futures, with many investors worrying that a severe credit tightening could crimp growth and dampen energy demand. But with stock markets showing more stability and with the positive economic data released Friday, crude oil prices have more support than in the past couple of weeks.
October Brent crude fell on the ICE futures exchange in London.
Nymex heating oil futures and gasoline both dropped by less then a penny to fetch $1.9914 and $1.9731 a gallon.