Oil above $65 after mixed US inventory data

[July 23, 2009]  VIENNA (AP) -- Oil prices remained above $65 a barrel on Thursday as traders looked to stock markets for direction after U.S. crude inventory data gave mixed signals on demand.

Benchmark crude for September delivery was down 3 cents to $65.37 a barrel by noon European electronic trading on the New York Mercantile Exchange. On Wednesday, the contract dropped 21 cents to settle at $65.40.

Oil prices have jumped from $58.78 a barrel during the last two weeks on growing investor optimism that the global economy will recover this year. But sluggish U.S. gasoline demand so far this summer has tempered some of that enthusiasm. Jittery traders continue to watch Wall Street and other major stock markets as they look for clues on the state of the economy.

"Oil prices lost ground around the globe on Wednesday in line with the Dow Jones index, which fell for the first time in eight trading days," said analysts at Vienna's JBC Energy. The Dow fell 34.68, or 0.4 percent, to 8,881.26.

The market got little direction from stocks Thursday, with Asian trading generally up but European shares flat or down slightly. And statistics from the Energy Information Administration Wednesday also were ambiguous on demand.

While the EIA said U.S. crude inventories fell by 1.8 million barrels last week, gasoline stocks rose by 800,000 barrels and inventories of distillates, including heating oil and diesel, reached their highest levels since 1984.

The report said U.S. gasoline in storage has risen about 3 percent from last year.

Still the price of oil may drift higher over the next few months as the global economy eventually emerges from recession.

"Beyond the background noise and swings in economic sentiment, the band from $65 to $75 per barrel would be the most comfortable range for prices to oscillate within this quarter, as part of the gradual normalization of market conditions," Barclays Capital said in a report.

In other Nymex trading, gasoline for August delivery was up by close to a penny at $1.85 a gallon and heating oil was flat at $1.72. Natural gas for August delivery jumped more than 6 cents to $3.85 per 1,000 cubic feet.

In London, Brent prices rose 13 cents to $67.34 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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