Singapore: Oil prices hovered above $75 a barrel Tuesday in Asia as traders mulled whether the recovery of the global economy is strong enough to sustain improving crude demand.
Benchmark crude for July delivery was up 4 cents to $75.16 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.34 to settle at $75.12 on Monday.
Oil prices have traded in a $70 to $80 range so far this month after dropping from $87 to $64 last month amid fears Europe’s debt crisis could hurt global economic growth. On Monday, credit rating agency Moody’s lowered its rating on Greece’s debt to “junk” status.
But oil traders have taken heart in recent weeks from a fall in US crude inventories, which suggests demand is improving.
Analysts expect another drop of 1.8 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos., when the American Petroleum Institute announces its weekly supply data late Tuesday and the Energy Department’s Energy Information Administration releases its report on Wednesday.
Some analysts expect the growth in oil demand in developed countries to catch up with burgeoning consumption in developing countries and push prices higher.
“We expect prices to eventually move back above $80 supported by the strong growth momentum in demand,” Barclays Capital said in a report. “Despite price movements being at the mercy of macroeconomic jitters lately, $70 has emerged as a strong floor and with good reason.”
In other Nymex trading in July contracts, heating oil fell 0.10 cent to $2.0249 a gallon and gasoline dropped 0.14 cent to $2.0750 a gallon. Natural gas was up 3.5 cents at $5.041 per 1,000 cubic feet.
Brent crude was up 12 cents to $75.32 a barrel on the ICE futures exchange.