Oil prices hovered around $99 a barrel today in Asia after a report showed US crude inventories fell more than expected, suggesting demand may be improving.
Benchmark oil for July delivery was down 26 cents to $99.11 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract gained $2.07 to settle at $99.37 yesterday.
In London, Brent crude for July delivery was up 65 cents to $120.81 a barrel on the ICE Futures exchange.
The American Petroleum Institute said late yesterday that crude inventories fell 3.0 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 1.9 million barrels.
Inventories of gasoline rose 1.1 million barrels last week while distillates fell 426,000 barrels, the API said. The Energy Department's Energy Information Administration reports its weekly supply data later today.
Crude has zigzagged near $100 since falling from $115 in early May as investors mull signs of a sluggish US economy. Excluding car sales, US retail sales rose 0.3% last month, better than analysts expected.
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However, gasoline sales were down 1% last week from a year ago, according to the latest survey by MasterCard SpendingPulse.
"The report demonstrates that consumers continue to feel the pain of gasoline prices above the $3.50 per gallon mark," energy consultant The Schork Group said in a report.
In other Nymex trading in July contracts, heating oil dropped 0.1 cent to $3.12 a gallon while gasoline fell 1.3 cents at $3.05 a gallon. Natural gas futures slid 2.6 cents at $4.56 per 1,000 cubic feet.