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Oil hovers below $98 as US crude supplies jump

Oil hovers below $98 as US crude supplies jump

July 13th, 2011 by ALEX KENNEDY, Associated Press in News

SINGAPORE (AP) - Oil prices hovered below $98 a barrel Wednesday in Asia after a report showed U.S. crude supplies unexpectedly rose last week, suggesting demand is weak.

Benchmark oil for August delivery was up 18 cents to $97.61 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude gained $2.28 to settle at $97.43 on Tuesday.

In London, Brent crude fell 14 cents to $117.61 per barrel on the ICE Futures exchange.

The American Petroleum Institute said late Tuesday that crude inventories rose 2.3 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 2.1 million barrels.

Inventories of gasoline dropped 1.6 million barrels last week while distillates increased 4.8 million barrels, the API said.

"The only bullish number out of yesterday's report seems to be gasoline inventories," energy consultant The Schork Group said in a report. "All told, the API report strikes us as bearish."

The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.

Robust economic growth in China helped boost oil prices. China, the world's second-largest crude consumer, said Wednesday that its economy grew 9.5 percent in the second quarter, down slightly from 9.7 percent growth in the first quarter.

Investors are also closely watching Europe's attempts to contain its debt crisis. On Tuesday, Moody's Investors Service downgraded its ratings on Irish government bond to junk.

European leaders haven't agreed yet on the nature of a new bailout agreement for Greece and how private holders of the country's bonds could contribute to easing the payout schedule.

In other Nymex trading in August contracts, heating oil rose 0.4 cent to $3.09 a gallon while gasoline added 1.4 cents at $3.11 a gallon. Natural gas futures gained 1.1 cents at $4.32 per 1,000 cubic feet.