Oil prices were little changed below $73 a barrel on Wednesday, hovering near their highest in 10 months amid expectations of strong summer gasoline demand and continued low inventory levels in the world's top consumer.
London Brent crude, currently seen as more representative of global oil prices, fell 3 cents to $72.90 a barrel, although trading activity was expected to be muted due to the US public holiday. US crude slipped 23 cents to $71.18 after gaining five percent over the past five days.
The New York Mercantile Exchange (Nymex) trading floor will be shut on Wednesday, but electronic Globes trade continues as usual. Although gasoline inventories in the United States have been rising steadily in recent weeks, they remain well below seasonal norms following a heavy maintenance season this spring and a slew of unplanned shutdowns.
But demand is stronger than ever. "Despite where prices are at the moment there is no indication that demand is tapering off at the pump," said Andrew Harrington, commodities analyst from ANZ Bank in Australia.
US travel group A predicted last week that a record 41.4 million Americans would hit the roads for Fourth of July travel, up 0.8 percent from last year despite near-record pump prices. "It's a lifestyle change that isn't going to change anytime soon - they love their big cars, and would sooner give up something else than that," Harrington said.
US weekly gasoline stocks probably rose by just 300,000 barrels last week, even with refinery utilisation rates recovering to above 90 percent, a Reuters poll found. Adding to supply woes, the 108,000-barrel-per-day Coffeyville Resources, refinery in Kansas remains submerged in floodwaters, as company official's work to determine the level of damage and oil spilled, a company spokeswoman said on Tuesday.
She added that officials were unable to immediately ascertain when the refinery would come back online. Crude oil stocks were expected to ease by an average of 300,000 barrels, falling from a nine-year high amid worries by some analysts that a tight output cap by Opec could lead to a rapid decline in inventories as refiners rev into action.
Analysts said some traders may also be applying a bigger geopolitical premium to prices following the nationalisation of the Venezuelan oil industry, the continued stand-off over Iran's nuclear programme and attempting bombings in the UK.
Britain's security threat level has been set at "critical" since two car bombs were found in central London on Friday and members of a suspected al Qaeda cell attacked an airport in Scotland on Saturday.
Eight suspects have been arrested. And last week, Venezuela's president Hugo Chives, threw out US oil giants ConocoPhillips and Exxon Mobil from the country, seizing oilfields. "The expectation is that Venezuela is unlikely to be effective in creating supply," Harrington said.