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Oil steadies as stronger demand balances glut

[LONDON] Crude oil prices steadied just above US$60 a barrel on Thursday as strong demand for oil products helped balance a global overhang of oil for immediate delivery.

North Sea Brent crude oil traded within a narrow 58-cent range as investors eyed a very weak physical crude market in the Atlantic basin amid reports of stronger demand for gasoline and diesel in the United States and Europe.

Official prices for Nigerian crude have hit their lowest in at least a decade with as much as 10 million barrels of unsold light, sweet crude oil capping Atlantic basin prices.

But demand for oil products is fairly strong. US gasoline demand in the week to June 19 hit the highest seasonal level since 1991, according to the US Energy Information Administration (EIA).

Brent for August was up 20 cents at US$63.69 a barrel by 1110 GMT, after ending the previous day down 96 cents, or 1.5 per cent. US crude for August was down 20 cents at US$60.07 a barrel, after finishing Wednesday down 74 cents. "Reports of unsold physical cargoes in the North Sea combined with a Brent crude oil contango that shows no signs of tightening are a warning that the market is currently not tightening up into the high demand season as one should expect,"said Bjarne Schieldrop, analyst at SEB Markets in Oslo.

An EIA report on Wednesday said US gasoline stocks climbed 680,000 barrels to 218.49 million in the week to June 19. A Reuters poll had indicated a 304,000-barrel drop.

US crude stocks declined for the eighth straight week, by 4.9 million barrels to 462.99 million, in the week ending June 19, compared with analyst expectations of a 2.1 million barrel draw, the EIA said. "There is not a clear direction," said Myrto Sokou of Sucden. "That's why you see this consolidation today." Traders awaited US economic data, including weekly jobless claims, due later on Thursday. Any signs of further economic growth in the United States would be a positive demand signal for oil, analysts say.

UBS raised its average 2015 Brent crude price forecast on Thursday to US$61.50 per barrel from US$56.25 per barrel earlier, while it increased its average 2015 US crude price outlook to US$56 a barrel, up from US$51.

Its revised 2016 forecasts were US$70 per barrel for Brent and US$67.50 per barrel for US crude.