Oil hovers above $60 as investors eye inventories

[May 20, 2009]  SINGAPORE (AP) -- Oil prices hovered above $60 a barrel Wednesday in Asia as investors looked to U.S. inventory data later in the day for clues about the strength of crude demand.

Benchmark crude for July delivery was up 44 cents to $60.54 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract rose 51 cents to settle at $60.10.

Investors will be watching for the weekly petroleum inventory data from the Energy Department's Energy Information Administration on Wednesday for signs crude demand may be growing.

Analysts expect a fall of 1.5 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Stocks dropped last week after rising for the previous 10 weeks.

Oil has jumped from below $35 a barrel in March on investor optimism that the worst of a severe U.S. recession may be over.

"I expect the market to push higher even if there's a build in the inventories just because that's where the momentum is," said Jonathan Kornafel, Asia director for market maker Hudson Capital Energy in Singapore.

Inventories dropped by 4.5 million barrels last week, the American Petroleum Institute said Tuesday. The API numbers are reported by refiners voluntarily while the EIA figures are mandatory.

Two refinery fires this week in the U.S. also helped boost prices.

Oil rose to $60 a barrel last week before retreating to near $56 later in the week.

"Considering we haven't had much of a pullback, I think at $60 the market has gotten ahead of itself," Kornafel said.

In other Nymex trading, gasoline for June delivery rose 3.2 cents to $1.8445 a gallon and heating oil up 1 cent $1.4964 a gallon. Natural gas for June delivery was up 1.7 cents at $3.93 per 1,000 cubic feet.

In London, Brent prices rose 30 cents to $59.22 a barrel on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

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