* World equities hit year high after strong earnings
* Analysts expect API report to show US crude supply draw
(Updates prices, details, changes dateline from LONDON)
By Richard Valdmanis
NEW YORK, July 21 (Reuters) - Oil touched a two-week high
above $65 a barrel on Tuesday as a slew of rosy corporate
earnings reports fed into hopes for an economic recovery that
could revive global energy demand.
U.S. crude <CLc1> gained 22 cents to $64.20 a barrel by
1700 GMT, after climbing to a two-week high of $65.53. London
Brent <LCOc1> rose 32 cents to $66.76.
The rise in the oil market came as a raft of major
companies, including Caterpillar Inc <CAT.N>, reported
stronger-than-expected results in the second quarter that many
analysts took as a sign of economic improvement. <.N>
A recovery in the economy could bode well for world energy
consumption, which shrank for the first time in a quarter
century under the weight of the recession.
Wall Street, however, dipped into negative territory amid
cautious comments about the third quarter from company
executives and U.S. Federal Reserve Chairman Ben Bernanke.
Weakness in the U.S. dollar also supported commodities
markets, analysts said, in part by strengthening the purchasing
power of buyers using other currencies.
"The (crude) market is trading more off the equities than
the dollar, with the economic indicators and earnings lending
support to sentiment," said Andy Lebow, a broker at MF Global
in New York.
The front-month August U.S. contract expires at close of
trade Tuesday and will be replaced by the September contract
<CLU9>, which slipped 15 cents to $65.14 a barrel.
Dealers said oil's gains were being kept in check by
looming U.S. inventory data that could show a drop in crude
stocks and increases in refined fuel supply. []
The American Petroleum Institute will release its weekly
figures at 2030 GMT, and the U.S. government's Energy
Information Administration will release a separate report on
Wednesday morning.
"As long as the equities are gaining on the belief that the
worst is over, then it also translates into higher consumer
confidence, higher disposable income through the equity pick-up
and that ultimately impacts demand," said Olivier Jakob of
Petromatrix.
Oil stocks in industrialised countries equated to 62.5 days
of demand cover at the end of May, according to the latest
figures from the International Energy Agency -- around 10 days
more than the Organization of the Petroleum Exporting Countries
considers comfortable.
Algerian Energy and Mines Minister Chakib Khelil Monday
predicted prices would stay in a $65-$70 dollar range this year
as long as the market remained oversupplied and said OPEC could
cut output when it next meets in September. []
In OPEC member Iraq, oil supplies have been rising. Iraqi
oil exports have averaged 2.08 million barrels per day (bpd) in
July and could yet top the levels around 2.2 million bpd
predating the 2003 ouster of Saddam Hussein, the head of Iraq's
State Oil Marketing Organization said Tuesday. []
Iraq is not subject to OPEC production quotas as it
attempts to rebuild following years of war and sanctions.
(Additional reporting by Barbara Lewis and David Sheppard in
London, Jennifer Tan in Singapore; Editing by Marguerita Choy)
