Oil rebounds after third day of heavy falls

The contract lost $5.31 to close at $129.29 a barrel yesterday at the New York Mercantile exchange, after similar plunges the previous two days.     

Brent North Sea oil for September delivery rose 34 cents to $131.41 after a drop of $5.12 to $131.07 yesterday in London.     

"What we are seeing is a bounce back after very sharp falls," said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.     

Prices have crumbled since striking record highs above $147 one week ago.     

Wednesday's price fall was largely driven by an unexpected weekly rise in US oil and gasoline inventories, according to Barclays Capital analyst David Woo.     

 

US government data showed US inventories rose by 3.0 million barrels to 296.9 million barrels in the week ending July 11, confounding market expectations of a decline of 2.2 million barrels.     

Analysts say the surprise rise in reserves indicated record oil prices are having an impact on energy demand in a US economy that is already weak.     

The United States is the world's biggest energy consumer. Government data showed American consumption of petroleum products fell two per cent over the past four weeks, compared with the same period a year ago, analysts said.