Oil prices rose on Wednesday after six straight sessions of losses, lifted by hopes of a strong earnings season and expectations data will show a drop in U.S. crude inventories.
U.S. crude was up $1.70, or 2.36 percent, to $73.68 a barrel by 10:50 a.m. EST, having fallen to $71.44 earlier. It closed at $71.98 Monday, the lowest since early June. ICE Brent crude futures were up $1.68 at $73.13.
Weekly U.S. oil data from industry group American Petroleum Institute at 2030 GMT Wednesday and the U.S. Energy Information Administration due on Thursday are expected to show a sizable draw on crude oil stocks.
I think we're pricing in a draw, that's a definitely a supportive factor, said Phil Flynn, analyst at PFGBest Research in Chicago.
And the stock market is up today. When you get a bit of economic optimism, people think we're going to need more oil.
The Dow Jones Industrial average was up 1.17 percent in morning trading as a higher profit outlook from State Street Corp bank helped equities markets shrug off fears of slower global economic growth. <.N>
Adding to bullish sentiment was an announcement by the Chinese government that it plans to invest more than $100 billion in infrastructure this year, helping spur an economy that has been widely expected to slow this year.
China Daily, the country's official English-language newspaper, said the government would $100 billion in 23 new infrastructure to boost domestic demand.
INVENTORIES TO FALL
U.S. oil data for the week to July 2 will likely show a 2.6 million barrel drop in crude stocks, a fall for the second consecutive week, due to lower imports in the United States, a Reuters poll of analysts showed.
Gasoline inventories were forecast down 300,000 barrels.
The release has been delayed by one day due to the U.S. Independence Day holiday Monday.
Oil markets have been trading consistently in line with equities markets in recent weeks. Oil prices rallied in early trading on Tuesday but slumped into negative territory after stocks pared losses.
More than anything else, it's the strength of the equity markets that are supporting crude oil markets, said Robert Yawger, senior vice president, energy futures at MF Global in New York.
After Hurricane Alex swept into Mexico last week, oil traders are also eyeing a low pressure system that the U.S. National Hurricane Center said had a 40 percent chance of developing into a tropical depression.
Euro zone economic growth in the first three months of 2010 was confirmed Wednesday at 0.2 percent quarter-on-quarter and 0.6 percent on the year, European Union statistics office Eurostat said, but any stronger expansion in the second quarter could be short-lived.
The rate of growth in the U.S. non-manufacturing sector slowed more than expected and hit its lowest since February, the Institute for Supply Management said on Tuesday.
(Reporting by Gene Ramos in New York and Alejandro Barbajosa in Singapore; editing by Marguerita Choy)