Oil prices rose above $58 a barrel Wednesday after a U.S. government report showed the
seventh consecutive decline in gasoline stockpiles leading into the summer driving season.
The gains came on the eve of a meeting of the Organization of Petroleum Exporting Countries in Vienna at which the group is expected to commit to existing supply cuts amid rising concern over global economic growth.
U.S. crude settled up 23 cents or 0.4% at $58.16 a barrel, after dipping earlier to a one-month low of $57.30.
Dealers said the market was focusing on the major equities markets, which were falling amid concerns that a deepening mortgage lending crisis in the United States could spread to the rest of the the nation's economy.
Oil has fallen around $4 in the past four sessions and is down 4.7% since the beginning of the year.
The jitters caught the attention of the Organization of Petroleum Exporting Countries ahead of its meeting in Vienna Thursday, when the group was widely expected to stick to existing supply constraints.
"The market is bearish," OPEC advisory committee member Edmund Daukoru said. "The global economy is slowing down. China is cooling off, India is cooling off, even the U.S. that is the
engine," he said.
Moderating the losses, the latest snapshot of inventories in the United States, the world's biggest oil consumer, showed a further fall in gasoline stocks ahead of summer, alongside a
modest build in crude supplies.
"Since the inventory numbers are within the range of expectations here, people in the energy markets are watching whether the stock markets will sell off again," said Tom Knight of Truman Arnold.
Gold also fell on Wednesday on the economic concerns.
Analysts said that, while the oil market remained susceptible to the stock market slide, the fundamental supply and demand balance remained key.
"Oil markets are more focused on the fundamentals of oil and the seasonal weakness that lies ahead for products and crude demand," said Michael Wittner, oil analyst at Calyon investment bank.
OPEC officials have said the group, which pumps more than a third of the world's oil, was likely to stick with a production cut of 1.7 million barrels a day agreed at its previous two meetings.
On Tuesday the International Energy Agency, adviser to 26 industrial nations, issued a report saying the world would need extra oil from OPEC in the coming months.
Oil stocks in member nations of the Organization for Economic Cooperation and Development may be headed for their biggest fall in more than 10 years as OPEC production cuts take effect, the Paris-based agency said.