Oil rises above $93 amid US crude supply drop

[June 29, 2011]  SINGAPORE (AP) -- Oil prices rose above $93 a barrel Wednesday in Asia after a report showed U.S. crude supplies dropped more than expected last week, suggesting demand is improving.

Benchmark oil for August delivery was up 47 cents to $93.36 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude gained $2.28 to settle at $92.89 on Tuesday.

In London, Brent crude for August delivery was up 80 cents to $109.58 a barrel on the ICE Futures exchange.

The American Petroleum Institute said late Tuesday that crude inventories fell 2.7 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 1.7 million barrels.

Inventories of gasoline dropped 91,000 barrels last week while distillates fell 945,000 barrels, the API said.

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

Oil markets are also awaiting a vote by Greek lawmakers later Wednesday on a $40 billion austerity plan. European officials say the government spending cuts are a necessary condition to receive the next installment of Greece's $156 billion bailout loan from the European Union and the International Monetary Fund, and avert a debt default.

Hours of rioting by protesters against the austerity plan outside Greece's parliament in Athens left 46 people injured Tuesday.

"Investors appear to be pricing in an orderly resolution to the Greek debt crisis," Ritterbusch and Associates said in a report. "However, any missteps toward the approval of a Greek austerity package could quickly reverse gains."

Crude has dropped from near $115 early last month amid concerns about slowing demand from the U.S. and Europe. Oil had surged from $84 in February, pinching consumer spending and helping to slow economic growth.

"There is little doubt that the jump in the price of oil earlier this year is an important reason why the global economy has lost momentum," Capital Economics said in a report.

"The recent fall in oil prices should help prevent what would otherwise have been an imminent double-dip (recession), but it will not be enough to rescue the world economy from a prolonged period of sluggish growth."

Capital Economics said it estimates a $20 fall in the price of oil increases global demand and economic activity by 0.5 percent.

In other Nymex trading in July contracts, heating oil added 1.7 cents to $2.84 a gallon while gasoline gained 2.3 cents at $2.91 a gallon. Natural gas futures fell 1.1 cents at $4.34 per 1,000 cubic feet.

[Associated Press; By ALEX KENNEDY]

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