Oil creeps above $72 after big fall on weak demand

[September 01, 2010]  BEIJING (AP) -- Oil prices rose above $72 a barrel Wednesday after a steep drop the previous day amid evidence that U.S. crude supplies remain high and demand weak.

By midday in Europe, benchmark crude for October delivery was up 66 cents to $72.58 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost $2.78 to settle at $71.92 on Tuesday.

Crude inventories jumped 4.7 million barrels last week, the American Petroleum Institute said late Tuesday. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 1.9 million barrels. Inventories of gasoline and distillates fell, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data -- the market benchmark -- later Wednesday.

Oil has traded mostly in the $70s for the past year amid investor concerns the economic recovery from last year's recession in developed countries may peter out once massive government stimulus spending fades.

High crude inventories in the U.S. suggest consumer demand remains sluggish.

"The fundamentals are dreadful to the point of being historically among the worst supply and demand factors ever seen," Cameron Hanover said in a report.

In other Nymex trading in October contracts, heating oil rose 2.30 cents to $2.0147 a gallon and gasoline gained 1.96 cents to $1.8770 a gallon. Natural gas for October delivery fell 3.3 cents to $3.783 per 1,000 cubic feet.

In London, Brent crude was up 76 cents at $75.40 a barrel on the ICE Futures exchange.

[Associated Press; By PABLO GORONDI]

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

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