Oil above $79 after US crude supply drop

[November 18, 2009]  SINGAPORE (AP) -- Oil prices extended gains above $79 a barrel Wednesday in Asia after an unexpected drop in U.S. crude supplies suggested demand could be improving.

Benchmark crude for December delivery was up 61 cents to $79.75 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 24 cents to settle at $79.14 on Tuesday.

U.S. crude inventories unexpectedly fell last week, the American Petroleum Institute said late Tuesday. Crude stocks fell 4.4 million barrels while analysts had expected a rise of 1.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The Energy Information Administration plans to announce its inventory report later Wednesday.

Crude prices have zigzagged around $79 a barrel for more than a month as investors mull mixed economic data from the U.S. Prices are up from $32 in December but still below the record high of $147 in July, 2008.

Home Depot Inc., Saks Inc. and Target Corp. all reported better-than-expected third-quarter results Wednesday. Traders will next be eyeing the holiday shopping season for signs of improving consumer confidence.

Some analysts expect weak global economic growth to keep commodities such as oil from surging much higher. Global growth will likely average 2.5 percent a year during the next three years, about half the rate between 2002 and 2007, said Stephen Roach, Asia Chairman for Morgan Stanley.

"I don't see commodities repeating the boom-like surges," Roach said in Singapore.

In other Nymex trading, heating oil rose 1.65 cents to $2.08 a gallon. Gasoline for December delivery gained 1.53 cents to $2.02 a gallon. Natural gas for December delivery jumped 3.7 cents to $4.57 per 1,000 cubic feet.

In London, Brent crude for December delivery rose 57 cents to $79.54 on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

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