Light crude oil trading above $65, US oil stocks down

Light crude oil is currently trading above $65 a barrel on Thursday, buoyed by data showing a drop in US crude oil stocks, which countered the rise in gasoline and distillates inventory, signaling weak demand from the world's top oil user.

But US weekly jobless claims figures due later are forecast to increase from a week ago and could underscore further weakness in the world's largest economy.

US crude oil futures for September delivery rose 19 cents to $65.59 a barrel by 11:53 p.m. EDT, after earlier hitting a low of $65.04 and settling at $65.40 on Wednesday. London Brent crude edged up 19 cents to $67.40.

"The EIA numbers, while contradicting those of the API's, were largely in line with what traders were expecting, thus the return of some strength in the market, but it lacks a sustained move higher," said Jonathan Kornafel, director of Hudson Capital Energy Asia.

Oil traders expecting equity markets to pull crude oil price higher may have to wait until the holiday season is over in September, as both markets have experienced rallies and appear to have entered a holding pattern.