Oil recoups losses after five days of decline

London: Oil rose to around $73 a barrel on Wednesday, rallying after several days of falls on industry data showing a big drop in US crude stocks and on a weaker US dollar.

The American Petroleum Institute (API) said in a report late on Tuesday that crude inventories in the world's top oil consumer fell 5.8 million barrels last week, bucking expectations for a rise, as refiners boosted fuel production.

The market awaited more data on US oil stocks from a weekly Energy Information Administration (EIA) report due later on Wednesday. A Reuters poll ahead of the EIA data forecast it would show a 600,000-barrel rise in US crude oil stocks.

US crude for January delivery was up 30 cents per barrel at $72.92 by 1416 GMT, having hit an earlier high of $73.87. The contract fell $1.31 on Tuesday. Nymex crude, which hit its lowest level since late November at $72.43 on Monday, has lost more than 7 per cent this month. London Brent crude gained 10 cents to $75.29.

Losses over the past five days have been partly driven by a recovery in the dollar. Oil is priced in dollars so a rise in the currency makes fuel more expensive to most consumers outside the United States. The dollar index against major currencies was down around 0.3 per cent by 1405 GMT.

David Wech, head of energy studies at JBC Energy in Vienna, said the oil market was looking out for yesterday's EIA figures, which could help push the market to lower levels if they were very bearish.

"The market could clearly go down further — $70 per barrel could be tested or even broken," he said.