Oil recovers to hold above $79
Prices rebound after a three-day slump as investors eye rising gasoline demand and dismiss falling consumer confidence.
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NEW YORK (Reuters) -- Oil rose above $79 a barrel Tuesday as rising gasoline demand in the United States helped investors shrug off a drop in consumer confidence in the world's biggest energy user.
Crude gained even as the U.S. dollar strengthened against other currencies in afternoon trade.
A report from MasterCard SpendingPulse on Tuesday showed U.S. gasoline demand rose last week, coming in 5.1% higher than year-ago levels and 0.1%higher than in the previous week.
"Weekly gasoline figures showed demand jumped last week, and that may begin to eat away at fuel inventories at a time when refiners have been processing less crude," said Gene McGillian of Tradition Energy in Stamford, Connecticut.
Most analysts expect government data due out Wednesday to show U.S. fuel inventories fell last week on lower-than-normal refining activity, according to analysts polled by Reuters.
U.S. crude for December delivery settled up 87 cents at $79.55 a barrel.
The dollar, often considered a "safe-haven" investment, rose Tuesday in reaction to flagging U.S. consumer confidence, which fell to a lower-than-expected 47.7 point in October, from a revised 53.4 in September. Consumer confidence was the weakest since July.
As the dollar strengthens, crude becomes more expensive for holders of other currencies.
Distillate stocks, including diesel and heating oil, probably fell 900,000 in the United States last week amid colder-than-normal temperatures, according to analysts polled by Reuters. Gasoline stocks probably fell by 300,000 barrels and crude probably rose 1.4 million barrels, according to the average analyst estimate.
Private industry group American Petroleum Institute will release its own weekly inventory data later Tuesday.
Better-than-expected quarterly earnings from oil giant BP Plc helped boost confidence in industrial sector companies, sending their shares higher.
U.S. gross domestic product (GDP) data is due to be released Thursday. Analysts expect data to show that the U.S. economy grew 3.3% in the third quarter. Data showing lower growth could prompt investors to shun riskier commodities, whose prices have rallied this month.
Iran seeks major changes to a United Nations nuclear fuel deal before it agrees to send its low-enriched uranium outside the country for processing, Iranian state media reported Tuesday.
Tense negotiations between Western powers and OPEC's No. 2 oil producer over its uranium enrichment have helped to push oil prices higher.
OPEC oil ministers this week raised the prospect of boosting oil production when OPEC meets in December if crude stocks fall fast, although an Iranian official said there was no indication OPEC should boost supplies soon. 
