Oil inches higher, adding to gains of 3-week rally

[July 28, 2009]  VIENNA (AP) -- Oil prices inched higher Tuesday on anticipation that further positive economic news would extend a three-week rally.

Vienna's JBC Energy attributed the buoyancy of oil markets to "enthusiastically absorbed earning figures of selected companies.

"In the U.S., the release of second-quarter GDP estimates on Friday will be a first test to market optimism," said JBC's newsletter Tuesday.

Benchmark crude for September delivery was up 15 cents, fetching $68.53 a barrel by noon in European electronic trading on the New York Mercantile Exchange. On Monday, the contract rose 33 cents to settle at $68.38.

Oil has surged from $58.78 a barrel earlier this month as solid second-quarter company earnings bolstered investor optimism that the global economy is recovering.

The Commerce Department said Monday that new U.S. home sales rose 11 percent in June as buyers jumped on reduced prices, low interest rates and a federal tax credit for first-time homeowners. However, disappointing earnings from Verizon Communications Inc., Aetna Inc. and Corning Inc. undermined investor confidence.

The Dow Jones industrial average rose 0.2 percent Monday, cooling off after jumping 11 percent in two weeks.

"The speed and magnitude of the recent rebound has taken us a bit by surprise," Societe Generale said in a report. "There's a high level of uncertainty about near-term price direction for oil."

In other Nymex trading, gasoline and heating oil for August delivery were up slightly at $1.93 and $1.80 a gallon. Natural gas for August delivery jumped by nearly 6 cents to $3.66 per 1,000 cubic feet.

In London, Brent crude prices rose 20 cents to $71.01 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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