Oil rises to near $77 on unexpected US supply fall

[October 23, 2010]  SINGAPORE (AP) -- Oil prices rose to near $77 a barrel Wednesday in Asia after a report showed U.S. crude supplies dropped last week, suggesting demand may be improving.

Benchmark crude for November delivery was up 41 cents to $76.59 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost 34 cents to settle at $76.18 on Tuesday.

Crude inventories fell 2.4 million barrels last week, the American Petroleum Institute said late Tuesday while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 2.2 million barrels. Inventories of gasoline rose while distillates fell, the API said.

The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday.

High crude supplies have weighed on oil prices as U.S. consumption has remained sluggish amid this year's uneven economic recovery.

Some analysts expect commodities such as oil to outperform other investments in coming years.

"Investors currently struggle with the risks of deflation, low growth and extremely easy monetary policy in developed economies," Bank of America Merrill Lynch said in a report. "We believe bonds and commodities represented far better investments than real estate and equities."

In other Nymex trading in October contracts, heating oil rose 1.55 cents to $2.140 a gallon and gasoline was steady at $1.948 a gallon. November natural gas held at $3.954 per 1,000 cubic feet.

In London, Brent crude rose 40 cents to $79.12 a barrel on the ICE Futures exchange.

[Associated Press; By ALEX KENNEDY]

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