Oil near $61 as traders eye U.S. inventories

By GEORGE JAHN, Associated Press Writer
VIENNA (AP) — Oil prices rose to near $61 a barrel Wednesday as investors looked to a weekly inventory report for clues on U.S. gasoline demand.

   Rising world stock markets also buoyed crude, with major exchanges logging gains in the wake of better-than-expected earnings reports from Intel and Goldman Sachs, and other signs that the global recession might be easing.

   Benchmark crude for August delivery was up $1.38 to $60.88 a barrel by afternoon European electronic trading on the New York Mercantile Exchange. On Tuesday, the contract fell 17 cents to settle at $59.52.

   Crude has loitered near $60 a barrel for the last few days as investors try to gauge the strength of the global economy. Oil shot to an eight-month intraday high of $73.38 a barrel on June 30, more than double the price in March.

   Weak gasoline demand in the U.S. has helped undermine investor optimism. U.S. motorists have pumped about 1 percent more gas this summer compared to 2008, but the amount remains significantly lower than in 2005 through 2007, according to the weekly SpendingPulse report by MasterCard released Tuesday.

   Traders will be eyeing a weekly inventory report from the Energy Department's Energy Information Administration on Wednesday. Analysts expect the EIA's gasoline inventory numbers to rise 750,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

   ``The fundamentals are still weak,'' said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore. ``It's the summer driving season, inventories should be falling. It's a bad sign.''

   Trader and analyst Stephen Schork said prices could swing either way in the next few days, setting a longer-term trend.

   ``We think a break below 58.59 sets the table for a flush towards $50,'' he wrote in his Schork Report. ``However, even though we are bearish we have to recognize and appreciate that a rebound back through 61.25 likely signals another attempt for a run at $75.''

   A solid start to second-quarter corporate results has helped bolster crude prices. Profits announced by Goldman Sachs and Johnson & Johnson on Tuesday topped analysts' estimates. Intel's better than expected report added to optimism.

   Goldman said in a separate weekly energy report that it expects crude to average $60 a barrel in July before rising to $75 in September.

   In other Nymex trading, gasoline for August delivery jumped by 4 cents to $1.69 a gallon and heating oil by nearly that to sell for $1.55 a gallon. Natural gas for August delivery increased by nearly 10 cents to $3.52 per 1,000 cubic feet.

   In London, Brent prices rose $1.71 to $62.57 a barrel on the ICE Futures exchange.

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