Oil Gains in New York as U.S. Supplies

Oil prices rose above $96 a barrel Tuesday in Asia amid expectations U.S. crude supplies dropped last week, a sign demand may be improving.

Benchmark oil for August delivery was up 66 cents to $96.59 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude fell $1.31 to settle at $95.93 on Monday.

In London, the September contract for Brent crude rose 17 cents to $116.22 per barrel on the ICE Futures exchange.

Crude inventories likely fell 1.3 million barrels last week while gasoline supplies probably dropped 450,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The American Petroleum Institute is scheduled to report its weekly supply data later Tuesday while the Energy Department's Energy Information Administration releases its report Wednesday.

Some analysts are concerned Europe's debt crisis and the lack of an agreement so far among lawmakers to raise the U.S. debt ceiling could undermine global financial stability and economic growth.

"The global economy simply faces too many serious headwinds for us to believe that growth rates will accelerate in second half of 2011 and the start of 2012," energy analyst Richard Soultanian of NUS Consulting said. "It will be sluggish at best and, at worst, we could see the start of a double dip recession.

Brent advanced as much as 1 percent as the euro strengthened against the dollar after Greece’s Finance Minister Evangelos Venizelos said a solution is “attainable” at a summit of European leaders to be held in two days. A weaker U.S. currency makes dollar-denominated assets such as oil more attractive. A U.S. government report tomorrow that may show crude inventories dropped a seventh week.

“The market is focusing on the robust, medium-term fundamentals and ignoring bearish factors,” said Torbjoern Kjus, senior analyst at DnB NOR in Oslo, who correctly predicted in May that supply from the Organization of Petroleum Exporting Countries would rise. “Based on the news flow over the past two months, Brent should be lower, maybe down to $100.”

Brent oil for September settlement rose as much as $1.11 cents to $117.16 a barrel on the ICE Futures Europe exchange. It was at $116.89 at 9:41 a.m. London time. Prices are 55 percent higher the past year.

Crude for August delivery on the New York Mercantile Exchange was up 82 cents at $96.75 a barrel after gaining as much as $1 to $96.93. The contract yesterday declined to $95.93, the lowest since July 14. The more actively traded September future climbed 81 cents to $97.06 a barrel.