Oil back towards US$56 but outlook still fragile, say traders

London

OIL rose towards US$56 a barrel on Thursday, recovering from part of the previous session's drop, although traders and analysts said the prospect of a further, sustained rally from near six-year lows looked weak.

Crude snapped a four-day winning streak on Wednesday, when the US government said crude inventories increased by 6.3 million barrels, rising for a fourth consecutive week to hit a record high.

While the global market has more than enough crude, a collapse in Libyan production and a raid on an oilfield …