Oil prices rose above $94 a barrel Wednesday on hopes that Greece will approve a crucial austerity package and after a report showed a drop in U.S. crude supplies, suggesting improved demand. By early afternoon in Europe, benchmark oil for August delivery was up $1.17 to $94.06 a barrel in electronic trading on the New York Mercantile Exchange. Crude gained $2.28 to settle at $92.89 on Tuesday. In London, Brent crude for August delivery was up $1.85 to $110.63 a barrel on the ICE Futures exchange. Markets were awaiting a vote by Greek lawmakers later Wednesday on a $40 billion austerity plan. European officials say the government spending cuts are a necessary condition to receive the next installment of Greece's $156 billion bailout loan from the European Union and the International Monetary Fund, and avert a debt default. Hours of rioting by protesters against the austerity plan outside Greece's parliament in Athens left 46 people injured Tuesday and clashes with police were continuing Wednesday. Shortly before the vote, an opposition deputy said she would back the unpopular bill, boosting chances the measures will be passed. "Investors appear to be pricing in an orderly resolution to the Greek debt crisis," Ritterbusch and Associates said in a report. "However, any missteps toward the approval of a Greek austerity package could quickly reverse gains." Rising confidence in the approval of the Greek austerity deal also helped weaken the dollar, making crude cheaper for investors. The euro was up to $1.4434 on Wednesday from $1.4364 late Tuesday in New York. The American Petroleum Institute, meanwhile, said late Tuesday that crude inventories fell 2.7 million barrels last week while analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., had predicted a drop of 1.7 million barrels. Inventories of gasoline dropped 91,000 barrels last week while distillates fell 945,000 barrels, the API said. The Energy Department's Energy Information Administration reports its weekly supply data later Wednesday. Crude has dropped from near $115 early last month amid concerns about slowing demand from the U.S. and Europe. Oil had surged from $84 in February, pinching consumer spending and helping to slow economic growth. "There is little doubt that the jump in the price of oil earlier this year is an important reason why the global economy has lost momentum," Capital Economics said in a report. "The recent fall in oil prices should help prevent what would otherwise have been an imminent double-dip (recession), but it will not be enough to rescue the world economy from a prolonged period of sluggish growth." Capital Economics said it estimates a $20 fall in the price of oil increases global demand and economic activity by 0.5 percent. In other Nymex trading in July contracts, heating oil added 5.85 cents to $2.8842 a gallon while gasoline gained 2.4 cents at $2.9136 a gallon. Natural gas futures fell 2.3 cents to $4.331 per 1,000 cubic feet.
