Oil hovers below $87 after mixed US supply report

SINGAPORE — Oil prices hovered below $87 a barrel Wednesday in Asia after a report showed US gasoline supplies fell more than expected last week while crude and distillate inventories rose. Benchmark crude for May delivery was down 4 cents to $86.80 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 22 cents to settle at $86.84 on Tuesday, while earlier in the day prices touched a new 18-month high of $87.09 a barrel. Gasoline inventories dropped last week by 3.0 million barrels, the American Petroleum Institute said late Tuesday. Analysts had expected a fall of 1.0 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. However, inventories of crude and distillates rose, the API said. The Energy Department's Energy Information Administration is scheduled to announce its supply report later Wednesday. Some analysts point to growing crude demand in developing countries as reason to expect prices will extend a two-month rally. "Evidence of a steady rebound in global oil demand is continuing to accumulate," Barclays Capital said in a report. "Non-OECD Asian and Middle Eastern demand continues to grow at a phenomenal pace." In other Nymex trading in May contracts, heating oil fell 0.52 cent to $2.2631 a gallon, and gasoline rose 0.63 cent to $2.3546 a gallon. Natural gas jumped 3.6 cents to $4.132 per 1,000 cubic feet. In London, Brent crude was up 5 cents at $86.20 on the ICE futures exchange. — AP