Singapore: Oil prices hovered below $77 a barrel yesterday in Asia as growing US crude supplies and weak stock markets undermined investor optimism.
Benchmark crude for September delivery was up 23 cents to $76.78 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $1.02 to settle at $76.56 on Wednesday.
Crude oil inventories unexpectedly increased last week according to the US Energy Department's Energy Information Administration, suggesting a consumption recovery in the US remains muted. Supplies grew by about 400,000 barrels while analysts had expected a fall of 1.6 million barrels.
Inventories of gasoline and distillates also rose.
Falling stock markets also dragged on oil prices as the Dow Jones industrial average fell 1 per cent on Wednesday after Federal Reserve chairman Ben Bernanke warned the US economic recovery was fragile. Asian stocks were mixed yesterday.
"The report reinforced our views of underlying bearish fundamentals across energy that will only act to accentuate downward price response to any further weakening in the equity markets," Ritterbusch and Associates said in a report.
Traders are taking heart from data from China, which this year became the world's biggest energy consumer. China's oil demand rose to a fresh record high in June and is 10 per cent above the same period last year.
"Worries about the robustness of Chinese oil demand remain unfounded, as the emerging giant continues to surprise to the upside," Barclays Capital said in a report.
In other Nymex trading in August contracts, heating oil fell 0.61 cent to $1.9953 a gallon, gasoline gained 0.47 cent to $2.0725 a gallon and natural gas added 1.7 cents to $4.530 per 1,000 cubic feet. Brent crude was up 11 cents to $75.51 a barrel on the ICE futures exchange.
