Oil prices rise after US inventories fall sharply

LONDON (AFP) - World oil prices rose on Wednesday after data showed crude stockpiles fell by a sharper than expected amount in top consumer the United States. New Yorks main contract, light sweet crude for delivery in August, climbed 75 cents to 77.90 dollars a barrel. Brent North Sea crude for August gained 79 cents to 77.44 dollars. The US Department of Energy (DoE) said US crude stockpiles slumped 5.1 million barrels last week. Analyst forecasts had been for a drop of only 1.2 million barrels, according to Dow Jones Newswires. US crude stocks dropped by five million barrels for the second consecutive week but remained close to historical highs for this time of year, said Christophe Barret, an oil analyst for Credit Agricole. The crude drop is likely to be related to better refinery demand. Oil prices extended gains after soaring Tuesday, when the dollar weakened and the International Energy Agency (IEA) forecast that demand was projected to increase slightly this year. In its latest monthly report, the IEA increased its outlook for 2010 oil demand growth slightly to 1.77 million barrels per day, said analysts at the JBC Energy consultancy in Vienna. Given the ongoing discussions of a double-dip recession and the absence of a clear sign of the sustainable recovery of the global economy, the figure seems fairly optimistic. Furthermore, the IEA sees demand growth in 2011 slowing down to 1.3 million barrels per day, indicating that the vast majority of the economic uptick will take place in 2010. Meanwhile, strong US company results have sparked hope of rising energy demand in the worlds biggest economy. It seems that the strong corporate earnings results from Alcoa and Intel boosted investor sentiment ... showing encouraging signs for the US economic recovery, noted analysts at the Sucden brokerage in London. Investors are looking for a more optimistic tone in the US corporate earnings in the second quarter that could increase global oil demand in the second half of 2010. This week, aluminium giant Alcoa reported a return to profit and raised its forecast for global demand while Intel posted quarterly profits of 2.9 billion dollars, the best result in the firms 42-year history. JPMorgan Chase kicks off the US financial sectors earnings season on Thursday, followed by Bank of America and Citigroup on Friday.

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