Oil lingers under $72 a barrel in Asia after 13 percent drop over 3 weeks

KUALA LUMPUR, Malaysia (AP) — Oil prices rose slightly Wednesday in Asia after a 13 percent fall over three weeks drew buyers but weak economic indicators tempered gains.

Benchmark crude for October delivery was up 28 cents at $71.91a barrel at midday Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract tumbled $1.47 to settle at $71.63 on Tuesday amid news of a big fall in U.S. home sales for July.

The price of crude has retreated about 13 percent in the past three weeks, creating a buying opportunity for traders. This helped to underpin oil prices Wednesday despite weaker Asian stock markets and a stronger dollar.

"The fact that oil has dropped so much in a short period of time is attracting some buyers. We have at least this morning snapped the losing streak in oil," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore.

Prices took a beating Tuesday after the U.S. National Association of Realtors said sales of previously occupied homes fell 27.2 percent in July to an annual rate of 3.83 million, far below what analysts expected. That report adds to high unemployment and sluggish manufacturing activity in the key Mid-Atlantic region as evidence of a slowing U.S. economic recovery.

U.S. oil and gasoline supplies, meanwhile, remain above the five-year average. Demand has been mediocre for most of the summer and refiners are cranking out products near their operating capacity, keeping inventories high.

The Energy Department will release its updated supply picture later Wednesday. American Petroleum Institute figures released late Tuesday showed an unexpected draw of 1.85 million barrels in crude inventories last week but gasoline supplies rose by 692,000 barrels.

This was in contrast to an analyst survey by Platts, the energy information arm of McGraw-Hill Cos., which forecast a rise of 1.1 million barrels of crude oil stocks and a drop of 875,000 barrels in gasoline supplies.

Shum pegged $70 a barrel as a strong floor price for crude in the near term amid uncertainties about the global economic recovery but expects prices to rise to the high $70s by the end of the year.

In other Nymex trading in September contracts, heating oil rose 0.7 cent to $1.943 a gallon and gasoline added 0.8 cent to $1.856 a gallon. Natural gas was up 0.4 cent at $4.043 per 1,000 cubic feet.

Brent crude was up 42 cents at $72.80 a barrel on the ICE futures exchange.