Oil hovers below $77 amid mixed signs on economy

[July 20, 2010]  BRUSSELS (AP) -- Oil prices hovered below $77 a barrel Tuesday as traders awaited corporate earnings reports for clues about the strength of the global economy and the outlook for energy demand.

By early afternoon in Europe, benchmark crude for August delivery was down 18 cents to $76.36 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 53 cents to settle at $76.54 on Monday.

"Oil markets are still dominated by woes about the state of the economy, while oil fundamentals come second," JBC Energy said in a report. "To reduce the substantial slack in oil markets, a marked improvement in oil demand is required."

Oil has traded between $64 and $87 so far this year and has hovered near $76 for the last two weeks amid light summer trading volume. Investors are eyeing a slow U.S. economic recovery and mixed corporate results so far during second-quarter earnings season.

"Investors are confident enough to keep the markets where they are ... but not excited enough to push them higher," Sander Capital said in a report.

Crude traders often look to equities as a barometer of overall investor sentiment.

Wall Street was expected to post a modest decline while investors awaited earnings from U.S. banking giant Goldman Sachs. Weak revenues from Bank of America Corp. and Citigroup Inc. last Friday triggered steep losses on Wall Street.

Traders are also keeping a close watch on China, which will likely account for more than half of global crude demand growth this year.

"China is unquestionably the most important influencing factor," JBC Energy said. "Strong Chinese demand growth has been a stable element in the oil market and even the worst global recession in 70 years did not manage to slow down consumption."

In other Nymex trading in August contracts, heating oil rose 0.26 cent to $2.0196 a gallon, gasoline gained 0.54 cent to $2.0644 a gallon and natural gas fell 1.9 cents to $4.491 per 1,000 cubic feet.

Brent crude was down 10 cents to $75.52 a barrel on the ICE futures exchange.

[Associated Press; By BARRY HATTON]

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

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