Oil above $72 in Asia on hopes of rising demand

KUALA LUMPUR, Malaysia — Oil prices extended gains to rise above $72 a barrel Wednesday in Asia, bolstered by hopes of rising fuel demand ahead of the release of US weekly crude inventory data.

Benchmark crude for July delivery added 23 cents to $72.22 a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract rose 55 cents to settle at $71.99 on Tuesday.

Initial inventory data by the American Petroleum Institute showed further substantial drops in crude stocks last week, signaling fuel demand growth, said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore.

The market will be watching to see if the more comprehensive Energy Information Administration data due to be released later Wednesday confirms the API figures, he said.

Federal Reserve Chairman Ben Bernanke's comments Tuesday that he was hopeful the US will not fall back into recession and reports of increased optimism among US small businesses also helped boost oil prices, Shum said.

"Some optimism has returned to the market in particular in the U.S. It appears that $70 is the bottom for oil and prices may creep back up to the high $70s as we go deeper into summer," he said.

Some analysts said oil prices may also spike amid concerns that the hurricane season, along with a drilling moratorium in the Gulf of Mexico due to the BP oil spill, could disrupt production of oil and natural gas in the Gulf.

In other Nymex trading in July energy contracts, heating oil rose 0.09 cent to $1.9662 a gallon, and gasoline was up 0.17 cent to $1.9908 a gallon. Natural gas was down 4.3 cents to $4.765 per 1,000 cubic feet.

Brent crude for July delivery was down 11 cents at $72.19 a barrel on the ICE futures exchange.

Source: GmaNews