Oil hovers below $71 in Asia amid signs of rising US crude supplies

Oil hovers below $71 amid US crude supply jump

SINGAPORE — Oil prices hovered below $71 a barrel Wednesday in Asia after a U.S. crude supply report showed an unexpected increase last week.

Benchmark crude for January delivery was down 2 cents to $70.67 at midday Singapore time in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract added $1.18 to settle at $70.69.

U.S. crude inventories unexpectedly rose last week, the American Petroleum Institute said late Tuesday. Crude stocks rose 920,000 barrels while analysts had expected a drop of 2.0 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The Energy Department’s Energy Information Administration plans to announce its inventory report later Wednesday.

“There’s clearly a lot of inventory to chew through,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. “Crude demand is weak right now, but it should slowly improve in 2010.”

Oil prices have fallen from $82 a barrel in October after surging from $32 in December 2008.

In other Nymex trading in January contracts, heating oil rose 1.12 cents to $1.91 while gasoline gained 0.66 cent to $1.85. Natural gas jumped 1.7 cents to $5.54 per 1,000 cubic feet.

In London, Brent crude for January delivery rose 5 cents to $72.10 on the ICE Futures exchange.