UPDATE 6-Oil rises towards $78 on economic growth optimism

                                
 * Shares rise in Europe and Asia on upbeat U.S.earnings
                                
 * Strong likelihood of tropical storm off U.S. gulf
                                
 * Coming Up: EIA U.S. oil inventory, demand report; 1430 GMT
                                
 
                                
 (Adds details, updates prices)
                                
 By David Turner and Joe Brock
                                
 LONDON, July 21 (Reuters) - Oil rose towards $78 a barrel on
Wednesday, after buoyant U.S. corporate earnings raised optimism
over the strength of economic recovery in the world's largest
economy.
                                
 U.S. crude <CLc1> for September, the front-month contract
after Tuesday's expiry of August, rose 22 cents to $77.80 a
barrel at 1400 GMT.
                                
 London ICE Brent futures <LCOc1> gained 25 cents to $76.47.
                                
  Sentiment towards the global economy was helped by strong
Wednesday earnings from investment bank Morgan Stanley <MS.N>
and diversified U.S. manufacturer United Technologies Corp.
<UTX.N>
                                
 Shares rose on Wednesday in Europe <.FTEU3> and Asia <.HSI>
<.NSEI>, but were little changed in early Wall Street trading.
<.SPX>, with traders waiting for Federal Reserve Chairman Ben
Bernanke's testimony to U.S. lawmakers at 1600 GMT. Some in the
markets anticipate Bernanke may suggest steps to spur lending.
                                
 Industry data released late on Tuesday showed crude stocks
in the United States fell by a smaller-than-expected 241,000
barrels in the week to July 16. [ID:nN2097449]
                                
 "I think the data was relatively neutral with a very small
decline in crude stocks," said Christophe Barret, oil analyst at
Credit Agricole.
                                
 "The corporate earnings in the U.S. and equities are having
a short-term supportive impact on oil prices," Barret added.
                                
 Closely watched U.S. crude and product inventory government
data from the Energy Information Administration is due on
Wednesday at 1430 GMT. [EIA/S]
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 Graphic on commodity performance:
                                
 http://graphics.thomsonreuters.com/10/CMD_PRFG0510.html
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 On Tuesday the U.S. National Hurricane Center estimated a 60
per cent likelihood that a tropical depression would form near
Hispaniola.
                                
 The storm could eventually reach the oil-rich Gulf of
Mexico. If this hit production, it would likely support an oil
price rally.
                                
 "This (tropical storm) could have a big impact in the coming
days and it will be closely watched, but we'll have to wait and
see," Barret said.
                                
 The Center has forecast this year's Atlantic storm season
may be the most intense since 2005, when hurricanes Katrina and
Rita nearly paralysed U.S. oil output and refining along the
Gulf coast.
                                
 China's oil demand growth accelerated to double digits in
June, Reuters calculations of official data showed on Wednesday.
[ID:nBJI002348] The International Energy Agency this week
described China as the world's biggest energy consumer, but
China disputed this assessment.
                                
  BP <BP.L> Plc rejected a Times of London report on
Wednesday that Chief Executive Tony Hayward was to step down
within the next 10 weeks.[ID:nLDE66K00N]
 (Additional reporting by Alejandro Barbajosa; editing by
Keiron Henderson)