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Oil hovers above $99 after US crude supply jump

Oil prices hovered above $99 a barrel Wednesday in Asia after a report showed U.S. crude

supplies unexpectedly jumped last week, suggesting demand may be weakening.

Benchmark oil for September delivery was down 19 cents to $99.40 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. Crude rose 39 cents to settle at $99.59 on Tuesday.

In London, Brent crude fell 4 cents to $118.24 per barrel on the ICE Futures exchange.

The American Petroleum Institute said late Tuesday that crude inventories rose 4.0 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 2.3 million barrels.

Inventories of gasoline dropped 600,000 barrels last week while distillates rose 2.9 million barrels, the API said.

The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday.

Investors are also closely watching negotiations among U.S. leaders to raise the government’s debt limit and Europe’s bid to contain its own debt crisis.

“There is no doubt that U.S. recovery to date has been extremely fragile,” said Richard Soultanian of NUS Consulting. “The uncertainty created by each of these challenges, at best, could derail the nascent economic recovery and, at worst, plunge us back into recession.”

In other Nymex trading in September contracts, heating oil fell 0.2 cent to $3.12 a gallon while gasoline gained 0.7 cent to $3.10 a gallon. Natural gas futures for August delivery rose 1.4 cents to $4.38 per 1,000 cubic feet.


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