Oil rises to near $85 on surprise US supply drop

[February 16, 2011]  SINGAPORE (AP) -- Oil prices rose to near $85 a barrel Wednesday in Asia after a report showed U.S. crude supplies unexpectedly fell last week, suggesting demand may be improving.

Benchmark crude for March delivery was up 46 cents at $84.78 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell 49 cents to settle at $84.32 on Tuesday.

In London, Brent crude for April delivery gained 62 cents to $102.26 a barrel on the ICE Futures exchange.

The American Petroleum Institute said late Tuesday that crude inventories fell 354,000 barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had forecast an increase of 2.8 million barrels. Crude supplies at the key Cushing, Oklahoma terminal rose 250,000 barrels.

Inventories of gasoline rose 1.2 million barrels and distillates dropped 1.2 million barrels, the API said.

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

"Recent (API) surveys have been exactly in line with the energy department's when it comes to Cushing, which bodes well for prices today," energy consultant The Schork Report said. "If the energy department corroborates, the (oil price) bottom may be behind us for now."

In other Nymex trading in March contracts, heating oil rose 1.1 cents to $2.74 a gallon and gasoline gained 1 cent to $2.50 a gallon. Natural gas futures were down 0.2 cent at $3.98 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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