Oil rose toward $80 a barrel today, following US equities higher on optimism the economy is recovering. Oil prices rose after three days of declines as investors were encouraged by strong corporate earnings that boosted equities prices, and on expectations of further drawdowns in US fuel inventories.

US crude for December delivery rose 50c to $79.18 a barrel, after falling earlier in the day. London Brent crude was up 34 cents at $77.60. Oil prices have been taking cues from US stock markets as investors gauge a recovery in the US economy by the strength of third-quarter corporate earnings.

The Dow Jones industrial average and S&P 500 stock index both rose, led by oil companies, after BP Plc reported better-than-expected quarterly results. Data showed US house prices rose for a fourth straight month. A Federal Reserve official said the US, the largest world oil consumer, has begun to recover from economic crisis. Much of the US is in the "early stages" of a recovery, Boston Fed President Eric Rosengren said today.

A stronger economy may lift fuel demand at a time when refiners have been operating at lower than normal rates. US fuel stocks likely fell further last week, according to the average forecast of eight analysts polled by Reuters ahead of the government's weekly inventory report Wednesday.
Distillates, including diesel and heating oil, probably fell 900 000 last week amid colder-than-normal temperatures, according to the average forecast. Gasoline stocks probably fell by 300 000 barrels, adding to sharp drawdowns in recent weeks. Crude stocks probably rose 1.4 million barrels, according to the average poll estimate. – Reuters