Oil drifts off 11-week high

NEW YORK (CNNMoney.com) -- Oil prices drifted lower this week, edging off last week's 11-week high above $79 a barrel. But trading remained rangebound as investors balanced strong corporate earnings against ongoing jitters over the economic recovery.

Prices tumbled midweek to below $77 a barrel before regaining some ground on Thursday. Absent any big catalyst, analysts expect that type of action to continue.

"Oil has rallied $8 since the beginning of the month, and I think this drawback is on slightly weaker economic news in the U.S. that has stirred up a whole lot of talk about a double-dip recession," said James Cordier, president of Liberty Trading Group.

The first round of pressure on prices came Tuesday after the Conference Board reported that its consumer confidence index sank in July to the lowest reading since February.

Oil prices continued to slide Wednesday after an inventory report from the Energy Information Administration showed a surprise build in crude supplies.

The report showed that crude stocks climbed by 7.3 million barrels last week, surprising analysts who were expecting inventories to fall by 2.3 million barrels, according to a consensus estimate collected by energy information provider Platts.

Cordier said worries about dwindling demand for crude will continue as the peak driving season ends and brings around the fall period, when oil consumption is seasonally the lowest. .

Oil rebounded 1.8% Thursday to $78.36 as the dollar dropped to a 11-week low against the euro. Crude, like other commodities, is priced in dollar, and a weaker greenback boosts prices.

Despite the pullback since last week, Cordier expects prices will continue to trade between $75 and $80 a barrel, where prices have swung for three weeks.

"This $75-to-$80 sandwich will likely continue because there's enough speculative and global demand to support prices, but not a robust enough recovery to push the price above $80," he said.