Oil climbs in Asia after big US crude drawdown
SINGAPORE: Oil prices climbed higher Thursday in Asia after jumping the previous day on an unexpected fall in US crude inventories.
Benchmark crude for September delivery was up 18 cents to $72.60 a barrel by midday in Singapore in electronic trading on the New York Mercantile Exchange.
On Wednesday, the contract jumped $3.23 to settle at $72.42 after the Energy Information Administration said crude in storage fell by 8.4 million barrels last week. Gasoline held in storage fell as well.
Analysts expected the API numbers to gain 1.1 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The drawdown of crude supplies suggests demand may be improving as the U.S. economy recovers from a severe recession.
"The outlook for the US economy looks pretty strong," Christoffer Moltke-Leth, head of sales trading at Saxo Capital Markets in Singapore. "We expect a recovery in the second half, and that helps crude."
Oil prices will likely test $75 a barrel soon, Moltke-Leth said.
"A moderate recovery is more or less discounted at this price level," he said. "We would have to see signs that it's a V-shaped recovery to be able to take prices a step higher."
In other Nymex trading, gasoline for September delivery was steady at $2.04 a gallon and heating oil held at $1.92. Natural gas for September delivery fell 1.1 cents to $3.11 per 1,000 cubic feet.
In London, Brent prices rose 21 cents to $74.38 a barrel on the ICE Futures exchange.