Oil holds above $72 after big US crude drawdown

[August 20, 2009]  VIENNA (AP) -- Oil prices held above $72 Thursday after jumping the previous day on an unexpected fall in U.S. crude inventories.

The drawdown of crude supplies suggests demand may be improving as the U.S. economy recovers from a severe recession.

Benchmark crude for September delivery was down 9 cents to $72.33 a barrel by noon European electronic trading on the New York Mercantile Exchange.

On Wednesday, the contract jumped $3.23 to settle at $72.42 after the Energy Information Administration said crude in storage fell by 8.4 million barrels last week. Gasoline held in storage fell as well.

Analysts expected the EIA numbers to gain 1.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

"The outlook for the US economy looks pretty strong," Christoffer Moltke-Leth, head of sales trading at Saxo Capital Markets in Singapore. "We expect a recovery in the second half, and that helps crude."

Oil prices will likely test $75 a barrel soon, Moltke-Leth said.

Trader and analyst Stephen Schork also suggested oil soon could go up to $75 -- and beyond.

"It's do-or-die for the bears," he wrote in his Schork Report. "If they are going to defend the range, than it will have to be here. If they fail, the path to $75, $80, $85 etc will be wide open."

In other Nymex trading, gasoline and heating oil for September delivery were down by less then a penny at $2.03 and $1.91 a gallon. Natural gas for September delivery added more than 4 cents to fetch $3.16 per 1,000 cubic feet.

In London, Brent prices fell 41 cents to $74.18 a barrel on the ICE Futures exchange.

[Associated Press; By GEORGE JAHN]

Associated Press writer Alex Kennedy contributed to this report from Singapore.

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