Oil rose on Tuesday, bouncing as U.S. stocks came off their early lows and ahead of weekly oil inventory reports expected to show crude supplies fell last week.
U.S. crude for August delivery rose 61 cents to $77.15 a barrel by 11:57 a.m. EDT. The August U.S. crude contract expires on Tuesday. The more liquid September contract traded 57 cents higher at $77.47.
Front-month ICE Brent crude for September delivery rose 46 cents to $76.08.
Expectations of another stock draw in domestic crude oil stocks are supporting the rise in crude futures. Also, the S&P 500 has come back up and that is also supportive, said Andy Lebow, broker at MF Global in New York.
Wall Street fell after disappointing revenues stood out in a flurry of quarterly corporate scorecards and housing data gave more evidence of a slowing economy. .N Goldman Sachs Group Inc (GS.N) and International Business Machines Corp (IBM.N) were both early losers.
Near midday, the S&P 500 index .SPX was about 10 points above its early low of 1,056.88, helping crude futures to bounce.
News that U.S. housing starts fell more than expected in June to their lowest level in eight months added to evidence the economy lost momentum in the second quarter. But a rise in permits offered some hope that homebuilding might pick up.
U.S. crude inventories were expected to have fallen 1 million barrels last week, according to a Reuters survey on Monday.
But products stocks were seen higher. Distillate fuel stockpiles, including heating oil and diesel, were expected to be up 1.6 million barrels, which would be an eighth straight week with stocks rising.
Gasoline inventories were also expected to be higher.
The industry group American Petroleum Institute's inventory report is due out at 4:30 p.m. EDT.
The U.S. Department of Energy will publish its oil statistics on Wednesday at 10:30 a.m. EDT.
Prices have been stuck in a range between $71 and $80 for more than six weeks as volatility related to the European debt crisis has dwindled. Crude inventory drops have been offset by weaker U.S. macroeconomic indicators, fueling concerns about a slower economic recovery and tepid demand growth.
Adding to support for oil, a tropical wave near Puerto Rico was given a 40 percent chance of becoming a tropic depression, the U.S. National Hurricane Center said on Tuesday.
The NHC has forecast this year's Atlantic storm season may be the most intense since 2005, when hurricanes Katrina and Rita hit the Gulf of Mexico U.S. energy output and infrastructure particularly hard.
Oil imports remained blocked at the Chinese port of Dalian on Tuesday following a fire and oil slick. Refinery operations have been disrupted and cargoes diverted since a pipeline explosion and fire on Friday.
(Additional reporting by David Turner in London; Editing by Lisa Shumaker)