Oil prices bounce on gasoline demand, economic data

By Christopher Johnson and Libby George

LONDON (Reuters) - Crude oil held small gains on Thursday as gasoline demand and supportive economic data from Germany provided a floor for prices.

U.S. crude remained roughly 8 percent lower than late last week as worries over the Greek economy and building U.S. oil stocks joined with advancing talks between Iran and world powers that could lead to sanctions relief for the country's oil exports.

Front-month U.S. crude futures were up 55 cents at $52.20 a barrel by 0950 GMT (5:50 a.m. EDT) but were still almost 8 percent lower than at the end of last week.

Brent crude was 40 cents higher at $57.45 a barrel, though still 4 percent below last Friday.

"Brent has found some bottom," said Olivier Jakob, managing director of PetroMatrix. "As long as gasoline is holding strong, it's hard for crude oil to have another sell-off without some news from Iran."

Strong demand worldwide for the motor fuel is encouraging refineries to process as much crude as they can, helping to underpin prices.

Chinese government action also helped stocks to rally on Thursday, assuaging for now concerns over the economy of the world's largest energy consumer.

In Beijing's most drastic step yet to stem a sell-off that has roiled global financial markets, China's securities regulator banned selling by shareholders with large stakes in listed companies.

In Germany, meanwhile, data from the Federal Statistics Office showed exports rose at the their fastest pace this year in May, boosting expectations that Europe's largest economy would pull off stronger growth in the second quarter after expanding modestly in the first.

Traders said downward momentum in oil had been broken by two days of gains and sentiment was more positive on Thursday.

"Supports held after the sharp sell-off on Monday, and these supports were not seriously tested yesterday," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.

"This, however, does not mean that bears threw the towel in."

Oil prices still faced strong headwinds, said Ole Hansen, head of commodity strategy at Saxo Bank.

"Oil is being pressured on multiple fronts, and China's equity wobble, the prospect of Iran's re-entry to the market and low liquidity all add up to an extremely fraught environment," he said.

World powers were close to a deal on Thursday that could lead to a lifting of western sanctions against Iran, though negotiators remained deadlocked on the issue of arms and missile trade.

A surprise increase in U.S. oil stockpiles despite the American driving season also added to global oversupply as the Organization of the Petroleum Exporting Countries and Russia produce at near-record levels.

(Editing by Pravin Char and David Goodman)

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