LONDON: Oil rose to around $77 per barrel on Tuesday, supported by firmer stock markets and expectations of a drop in US crude inventories.
European shares were slightly stronger in early trade, tracking gains on Wall Street, as optimism grew over second-quarter corporate earnings ahead of results from US companies.
US crude for August delivery rose 46 cents to $77.00 a barrel by 0922 GMT. The August US crude contract expires last on Tuesday. The more liquid September future was trading up 46 cents at $77.36.
Front-month ICE Brent crude rose 41 cents to $76.03.
US crude inventories fell 1 million barrels on average last week, according to a Monday Reuters survey. The poll also predicted that stockpiles of distillate fuel, including heating oil and diesel, rose 1.6 million barrels, extending the build-up to the eighth straight week.
Bullish forecasts for a fourth consecutive weekly drop in US crude inventories, in figures to be published later on Tuesday, were countered by bearish predictions of a rise in oil products in the data due out at 2030 GMT.
"The heating oil crack remains under pressure, and in that environment we will focus more on the stock change in products than in crude oil as further weakness in the cracks will start to work against future crude oil demand," Olivier Jakob of Petromatrix said.
The US Department of Energy will publish its oil statistics on Wednesday at 1430 GMT.
Prices have been stuck in a range between $71 and $80 for more than six weeks as volatility related to the European debt crisis has dwindled. A tighter crude market has been offset by weaker US macroeconomic indicators signaling a slower recovery in the world’s largest economy.
Adding some more support for oil, a tropical wave centered around Puerto Rico had a 20 percent chance of becoming the next tropical cyclone of the Atlantic hurricane season in the next two days, the US National Hurricane Center said late on Monday. The season lasts from June to November.
The Hurricane Center has forecast this year’s Atlantic storm season may be the most intense since 2005, when hurricanes Katrina and Rita nearly paralyzed the Gulf of Mexico US oil industry for weeks, boosting oil prices.
This year, "we are talking about one of the worst hurricane seasons, and if it’s going to start, it’s going to start shortly," said Peter McGuire, managing director at CWA Global Markets in Sydney.
China overtook the United States last year to become the world’s largest energy user, according to a Financial Times report on Monday, citing the International Energy Agency.
China’s rise to the top ranking was faster than had been expected in part because the US has outpaced China in improving energy efficiency measures over the past decade.
But a senior Chinese official on Tuesday questioned the IEA’s conclusion that China had overtaken the US
The IEA has had a relatively high estimate of China’s energy consumption and carbon dioxide emissions, said Zhou Xian, spokesperson for China’s top energy agency. But he declined to give alternative estimates.