Oil rises above $79 after US crude supply drop

Oil prices rose above $79 a barrel today in Asia after a report showed US crude inventories unexpectedly fell last week, suggesting demand may be improving.
    
Benchmark crude for April delivery was up 34 cents to $79.20 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract lost $1.45 to settle at $78.86 yesterday.
    
Oil has bounced between $70 a barrel and $80 for most of the last six months as investors wait for signs that US crude demand is catching up with an overall economic recovery.
    
Crude inventories fell 3.1 million barrels last week, the American Petroleum Institute said late yesterday. Analysts had expected an increase of 2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
    
Supplies of distillates, which include heating oil and diesel fuel, also fell while gasoline supplies grew, the API said.
    
The Energy Department's Energy Information Administration is scheduled to announce its supply report later today.     

In other Nymex trading in March contracts, heating oil gained 1.15 cents to $2.044 a gallon, and gasoline rose 0.8 cent to $2.074 a gallon. Natural gas was down 1.9 cents at
$4.759 per 1,000 cubic feet.
    
In London, Brent crude was up 30 cents at $77.55 on the ICE futures exchange.