Oil hovers near $76 as stock markets sell off

Crude inventories dropped last week by 3.4 million barrels, the American Petroleum Institute said late Tuesday. Analysts had expected a fall of 1.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

By ALEX KENNEDY
The Associated Press

6/30/2010

SINGAPORE — Oil prices hovered near $76 a barrel Wednesday in Asia as plunging stock markets undermined the confidence of crude traders, offsetting signs of improving U.S. demand.

Benchmark crude for August delivery was up 28 cents to $76.22 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract fell $2.31, or 3 percent, to settle at $75.94 on Tuesday.

Most Asian stock markets fell Wednesday, following a 2.7 percent drop in the Dow Jones industrial average. Investors were dismayed that the Conference Board's Consumer Confidence Index dropped sharply in June and by more than economists had expected.

The next crucial U.S. economic release is an employment report on Friday that will show whether the recovery in the world's largest economy has become self-sustaining enough to make a dent in unemployment that's been hovering near 10 percent.

"We don't see Friday's jobs report saving us from what seems to be course set for a double-dip recession," Cameron Hanover said in a report.

A larger than expected drop in U.S. crude supplies — a sign demand may be improving — helped counter stock market pessimism.

Crude inventories dropped last week by 3.4 million barrels, the American Petroleum Institute said late Tuesday. Analysts had expected a fall of 1.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

Inventories of gasoline fell while distillates rose, the API said.

The Energy Department's Energy Information Administration is scheduled to announce its supply report later Wednesday.

In other Nymex trading in July contracts, heating oil fell 1.78 cents to $2.00 a gallon and gasoline dropped 0.20 cent to $2.07 a gallon. Natural gas was up 3.6 cents at $4.51 per 1,000 cubic feet.

Brent crude was down 7 cents to $75.37 a barrel on the ICE futures exchange.

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