Oil above $77, traders expect inventory drop

20 July 2010

Written by John King

Crude oil prices were rising on the New York Mercantile Exchange this morning (July 20th) and were above $77 a barrel in the Asian trading session.

Heating oil prices were also rising on the bourse, although both had retreated from early gains by the time European markets opened.

Support for the commodities came ahead of the latest inventory reports from the American Petroleum Institute and the Energy Information Administration, both of which are expected to show improving demand conditions in the US.

A poll conducted by Reuters suggested that crude inventories probably fell one million barrels last week. Bloomberg's weekly survey returned the same prediction, with both polls anticipating an increase in gasoline stocks.

"I'm pretty sure you will see an increase in demand over the next few weeks and inventories have been in decline," said Peter McGuire, managing director at CWA Global Markets in Sydney, speaking to Reuters.

He added that prices could be back above $80 a barrel by August as demand conditions improve.