Oil climbed to $77 on Tuesday as forecasts for a fourth consecutive weekly drop in U.S. crude inventories bolstered the positive influence of rising stock markets in most of Asia.
Shares of resource firms and banks clawed back some of their recent losses, helping to boost U.S. crude for August by 47 cents to $77.01 a barrel at 0644 GMT (2:44 a.m. EDT) for a second straight day of gains.
The August contract expires on Tuesday, while the more liquid September future was trading up 40 cents at $77.30.
ICE Brent crude added 34 cents to $75.96.
Prices have been stuck in a range between $71 and $80 for more than six weeks as volatility related to the European debt crisis dwindled, while a tighter crude market has offset weaker U.S. macroeconomic indicators signaling a slower global recovery.
I'm pretty sure you will see an increase in demand over the next few weeks and inventories have been in decline, said Peter McGuire, managing director at CWA Global Markets in Sydney, adding prices could top $80 in the first week of August.
U.S. crude inventories likely fell 1 million barrels on average last week, a Reuters survey showed on Monday, while stockpiles of distillate fuel including heating oil and diesel, probably rose 1.6 million barrels, extending the buildup to the eighth straight week.
For gasoline, stocks could have risen 1.1 million barrels on average, the poll showed. That would be the fourth week of gains.
Industry group the American Petroleum Institute will release its inventory report for the week to July 16 on Tuesday at 2030 GMT, followed by government statistics on Wednesday at 1430 GMT.
Adding some more support for oil, a tropical wave centered around Puerto Rico had a 20 percent chance of becoming the next tropical cyclone of the Atlantic hurricane season in the next two days, the U.S. National Hurricane Center said late on Monday. The season lasts from June through November.
The Hurricane Center has forecast this year's Atlantic storm season may be the most intense since 2005, when hurricanes Katrina and Rita nearly paralyzed the Gulf of Mexico U.S. oil industry for weeks, helping oil prices to gain.
We are talking about one of the worst hurricane seasons, and if it's going to start, it's going to start shortly, McGuire said.
China overtook the United States last year to become the world's largest energy user, the Financial Times reported on Monday, citing the International Energy Agency. China's rise to the top ranking was faster than had been expected in part because the U.S. has outpaced China in improving energy efficiency measures over the past decade.
But a senior Chinese official on Tuesday questioned the IEA's conclusion that China had overtaken the U.S.
The IEA has had a relatively high estimate of China's energy consumption and carbon dioxide emissions, said Zhou Xian, spokesperson for China's top energy agency, declining to give alternative estimates.
Over the year, oil prices have stayed within a $23 range, hitting a 19-month peak above $87 and a trough below $65, both in May.
Wall Street gains on Monday were limited by a drop in U.S. housing data showing cracks in the recovery of the world's largest economy as well as disappointing results from Texas Instruments and International Business Machines, which dragged equities lower in after-hours trade.
(Editing by Ed Lane)