Crude Rises Ahead of Supply Data

NEW YORK -- Oil futures rose Wednesday as traders expected the U.S.'s ample commercial crude stockpiles to decline a fourth straight week.

Light, sweet crude for August delivery traded up $1.75, or 2.5%, at $71.64 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose $1.88 to $71.18 a barrel.

Crude erased the prior session's losses after the American Petroleum Institute late Tuesday said U.S. crude-oil stockpiles fell 6.8 million barrels in the week ended June 26, a far bigger drop than analysts expected. Separate oil inventory data from the U.S. Energy Information Administration are due at 10:30 a.m. Eastern.

On Tuesday, oil posted an eight-month intraday high of $73.38 a barrel before a gloomy consumer confidence report tugged prices lower.

"If Wednesday's EIA numbers shadow the API, oil prices could stage another spike toward Tuesday's highs," said Edward Meir, an analyst with MF Global, in a note. "Any bullish 'surprise' in the inventory data has to be substantial, otherwise values will likely head lower if the numbers do not carry enough of a punch."

Crude rose more than 40% in the second quarter, the biggest quarterly percentage gain in 19 years. Crude's advance was supported by rising equities, a weaker dollar and a flow of investment money entering commodities as a hedge against inflation. However, market participants have called into question the rally, noting that oil demand remains soft and supplies are bulging.

Analysts polled by Dow Jones Newswires expect the EIA data will show crude stockpiles likely declined by 2.1 million barrels last week, while gasoline stockpiles climbed by 1.9 million barrels and distillates rose by 1.6 million barrels.

Analysts forecast refinery utilization capacity will increase by 0.2 percentage point to 87.3% of capacity. link....