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Wednesday, Jul 11, 2012 6:15 AM UTC

Oil rises above $84 as US crude supplies drop

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Topics: From the Wires,

SINGAPORE (AP) — Oil rose above $84 a barrel Wednesday after a report showed U.S. crude supplies fell for a second week, suggesting demand may be improving.

The American Petroleum Institute said late Tuesday that crude inventories fell 700,000 barrels last week, including a 900,000 barrel drop at the key oil storage facilities at Cushing, Oklahoma. Inventories of gasoline rose 2.5 million barrels last week and distillates dropped 700,000 barrels, the API said.

The Energy Department’s Energy Information Administration reports its weekly supply data — the market benchmark — later Wednesday.

Benchmark oil for August delivery was up 63 cents at $84.54 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude dropped $2.08 to settle at $83.91 on Tuesday in New York.

In London, Brent crude for August delivery was up 51 cents at $98.48 per barrel on the ICE Futures exchange.

Crude has slumped from $106 in May amid signs the global economy is slowing. Investors will likely continue to react to the latest economic indicators, particularly the latest data about industrial production and gross domestic product Friday from China, the world’s second-largest crude consumer, energy trader and consultant Ritterbusch and Associates said.

“Wide price swings are still anticipated in both directions but with little price change expected across the week,” Ritterbusch said in a report. “The Chinese data may well determine how the energy market finishes this week.”

In other energy trading, heating oil was down 3.5 cents at $2.71 per gallon and gasoline futures fell 3 cents to $2.73 per gallon. Natural gas gained 1 cent to $2.87 per 1,000 cubic feet.

More Alex Kennedy.

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