Oil pares losses

By Hibah Yousuf, staff reporter

NEW YORK (CNNMoney.com) -- Oil prices pared early losses and posted modest gains Thursday as investors weighed weak housing reports with better-than-expected reports on initial jobless claims and manufacturing.

What prices are doing: Crude oil futures for August delivery added 16 cents, or 0.2%, to settle at $76.51 a barrel. Earlier, prices fell 1.4% to 75.32.

The national average price for a gallon of regular unleaded gas increased to $2.753, up 1.2 cents from the previous day's $2.741, according AAA.

What's moving the market: Worse-than-expected economic news has dragged down oil prices by almost 2% lower during the past two session.

A report earlier this week showed that existing home sales fell 2% last month, while a separate report showed that new homes sales fell almost 33% to a record low in May, the first month following the expiration of the homebuyer tax credit.

The Federal Reserve's latest take on the economic recovery has also worried investors. After concluding a two-day policy meeting Wednesday, the central bank cautioned that "financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad."

But oil managed to trim session losses and finish higher Thursday after a report from the Department of Labor Thursday showed that the number of Americans filing new claims for unemployment fell to 457,000.

Investors also welcomed better-than-expected manufacturing data. A report from the Commerce Department showed that durable goods orders fell 1.1% May, better than the 1.3% drop that was expected.

What analysts are saying: "I think that the economic news we've had over the last 48 hours is still drawing a lot of caution and tempering the idea that the U.S. economy is rebounding," said James Cordier, president of Liberty Trading Group.

"The improved unemployment figures are breaking the fall a bit, but given the other poor economic news, oil can't sustain the levels it has been trading at recently," Cordier added.

He expects prices to ease into the low $70-range by August as demand wanes following the peak of the summer driving season.  To top of page

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