Oil rises above $77 amid mixed US demand signals

[July 15, 2010]  LONDON (AP) -- Oil prices rose above $77 a barrel Thursday in Europe amid mixed signals about the strength of U.S. crude demand.

Benchmark crude for August delivery was up 49 cents to $77.53 a barrel at midday London time in electronic trading on the New York Mercantile Exchange. The contract fell 11 cents to settle at $77.04 on Wednesday.

Oil has traded between $70 and $80 this month as investors ponder how much a pullback of government stimulus spending could undermine global economic growth and crude demand in the second half.

On Wednesday, the Federal Reserve gave a bearish signal by lowering its 2010 gross domestic product forecast by 0.2 percentage points to a range of 3.0 percent to 3.5 percent, suggesting Europe's debt and fiscal crisis could undermine expansion of the world's No. 1 economy.

On the other hand, crude prices were supported by the weekly inventories report from the Energy Department's Energy Information Administration on Wednesday, which showed crude supplies shrank more than analysts had forecast, a sign demand may be improving.

"We expect the supply-demand balance to continue to tighten in the second half as continued global economic growth albeit likely at a slower pace continues to strengthen demand," Goldman Sachs said in a report.

Some analysts expect strong oil demand from developing economies will offset sluggish consumption in rich countries and help push prices higher. China said Thursday its economy grew 10.3 percent in the second quarter while Singapore reported a record 19.3 percent surge Wednesday.

Analysts at Switzerland-based Petromatrix said crude oil inputs to Chinese refineries hit a record high in June.

In other Nymex trading in August contracts, heating oil rose 0.39 cents to $2.0400 a gallon, gasoline rose 0.96 cents to $2.0761 a gallon and natural gas rose 0.4 cents to $4.310 per 1,000 cubic feet.

Brent crude was up 18 cents to $76.84 a barrel on the ICE futures exchange.

[Associated Press; By NATALIE RAGUS]

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

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.