LONDON, Aug 18: Oil prices climbed Thursday after shedding over two dollars the previous day amid an increase in crude reserves in the United States that eased worries of tight supplies.

New York’s main contract, light sweet crude for delivery in September, added 31 cents to $63.56 per barrel in electronic trade, after shedding $2.83 on Wednesday.

In London, the price of Brent North Sea crude oil for delivery in October gained 10 cents to $62.66 a barrel Thursday, after losing $2.52 in the previous day’s trade.

“We saw massive fund liquidations yesterday for profit-taking, and this morning, the market is undecided as to where prices will go,” said Bache Financial trader Christopher Bellew.

Recent supply fears, heightened by US refinery problems, had pushed New York futures to a historic high of 67.10 dollars last Friday, and London’s Brent crude to a record 66.85 dollars on Monday.

Crude prices tumbled Wednesday as the market reacted to data showing stronger US reserves of crude but sharply lower gasoline stocks.

“The figures were bullish at every turn, yet the market was due a correction lower and the breaking of key levels led to increased selling,” said analysts at the Sucden brokerage firm.

“The market is expected to find its feet again with the only bearish news currently being the slow in demand growth from the US and China, but with supply still in question there remains a good chance that after a dip lower we could see a renewed drive towards a whopping $70.”

The weekly US Department of Energy (DoE) petroleum report released Wednesday showed crude oil inventories rose by 0.3 million barrels to 321.1 million barrels in the week to August 12 — above the upper end of the average range at this time of the year.

Oil traders were also absorbing a report from Goldman Sachs, in which the US investment bank revised upwards its forecasts for oil prices, citing a lack of investment in the sector.

The bank raised its forecasts for New York crude in 2005 from $53.50 per barrel to $67. And it predicted a 68-dollar average in 2006, compared with its previous forecast of $55 per barrel.

The DoE report meanwhile said gasoline stockpiles fell by 5 million barrels in the week to August 12, the seventh straight weekly decline and was far more than forecasts of a 1.5-million-barrel drop.

The decline, which came as US oil companies drew down their stocks to cope with summer driving demand, put levels of gasoline supplies “near the bottom end of the average range” for this time of year, the DoE said.

Stockpiles of distillate fuel, which make heating oil and diesel, increased by 1.2 million barrels to 131.1 million, in line with market expectations of a 1.6-million-barrel increase.

Gasoline demand will begin to level out by early September as the high-demand US summer driving season nears to a close.

Refiners will then focus on stockpiling distillates, particularly winter heating fuel before the cold sets in.—AFP