Oil prices rose to near $60 a barrel Wednesday in Asia as an unexpected fall in U.S. crude inventories suggested demand may be picking up.
Benchmark crude for June delivery was up 88 cents to $59.73 a barrel midday in Singapore, in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract rose to a six-month high of $60.08 a barrel before settling at $58.85, up 35 cents. After settlement in New York, the American Petroleum Institute said oil stocks fell 3.13 million barrels to 370.7 million last week. Analysts had expected a gain of 1.4 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
"The big driver today is the API number," said Clarence Chu, a trader with market maker Hudson Capital Energy in Singapore.
"That's a pretty big draw when people were expecting a build." Investors will also be watching for the weekly petroleum inventory data from the Energy Department's Energy Information Administration on Wednesday. According to the EIA, crude stocks have risen ten consecutive weeks and are near 19-year highs. Prices have jumped from below $35 a barrel in February on investor optimism that the worst of a severe U.S. recession is over. However, some traders are skeptical that still-weak global crude demand can justify the recent rally.
"There's a good chance the price will blast through $60 in the short-run," Chu said. "But I don't see the demand out there yet." In other Nymex trading, gasoline for June delivery rose 2.39 cents to $1.70 a gallon and heating oil gained 2.30 cents to $1.53 a gallon. Natural gas for June delivery jumped 11.4 cents to $4.46 per 1,000 cubic feet.
In London, Brent prices rose $1.00 to $58.94 a barrel on the ICE Futures exchange.