Oil prices rebounded Wednesday after plunging by more than US$2 a barrel overnight as developments in major oil producers Iran and Nigeria eased geopolitical concerns.
Traders were eyeing the release Thursday of the U.S. government's weekly fuel supply snapshot, which was expected to show higher gasoline stockpiles.
Light, sweet crude for July delivery added 15 cents to US$63.30 a barrel in Asian electronic trading on the New York Mercantile Exchange midmorning in Singapore.
"The US$2 drop yesterday is not necessarily the beginning of a downward trend so some market participants view the moment as a buying opportunity," said Victor Shum, energy analyst with Purvin & Gertz in Singapore.
The Nymex July crude contract dropped US$2.05 to settle at US$63.15 a barrel Tuesday on hopes that the inauguration of a new president in OPEC member Nigeria would contribute to a stable supply from the Niger Delta region.
A rare, formal meeting over the weekend between U.S. and Iranian officials also soothed traders' concerns about a potential conflict between the two countries.
"Those new items were interpreted by the oil market as calming news, as far as geopolitics is concerned. And geopolitical factors have been key drivers for the oil market," Shum said.
Umaru Yar'Adua, 56, was sworn in Tuesday as the new Nigerian president, replacing Olusegun Obasanjo, who stepped down after eight years.
In his inaugural address, Yar'Adua called for an immediate end to hostilities in the country's southern oil region. The main militant group, the Movement for the Emancipation of the Niger Delta, responsible for shutting in nearly 20 percent of Nigeria's oil production over the past year, said they are considering the request.
Shum said, however, that the energy market continued to be driven by a number of factors, such as the U.S. gasoline supply situation, which despite recent increases remains well below the average for this time of year.
The U.S. Energy Department's weekly report to be released Thursday is forecast to show domestic gasoline stocks rose by 1 million barrels in the week ended May 25, according to a Dow Jones Newswires poll of analysts.
Crude oil inventories were expected to build by about 300,000 barrels, while distillates stocks were predicted to rise by about 500,000 barrels.
Heating oil futures gained 0.7 cent to US$1.876 a gallon (3.8 liters).