Oil firmed above $68 a barrel on Tuesday, in its most sustained rally since hitting record highs in July last year, supported by renewed optimism over a global economic recovery.
U.S. oil futures looked set to rise for the 10th straight session on Tuesday, based on Reuters continuation charts, in the most consecutive daily gains since prices hit a high of $147.27 last year.
U.S. crude rose 8 cents to $68.46 a barrel by 0935 GMT, after rising to $68.99 on Monday, the highest since July 2, spurred by robust U.S. homes sales data.
London Brent crude rose 26 cents to $71.07 barrel, off an earlier four-week high at $71.35.
Prospects that the global economy will improve and lift falling oil demand have helped push crude prices from below $33 a barrel in December.
"I think it is still external factors lifting prices today, rising stocks markets, weaker dollar and economic optimism after the U.S. home sales data yesterday," said Carsten Fritsch at Commerzbank.
European stock markets were largely unchanged on Tuesday, while the U.S. dollar fell to a 2009 low after Monday's U.S. data and upbeat outlooks for corporate results.
Oil company BP reported a mixed set of second-quarter results on Tuesday. BP is the first of the top tier of Western oil companies, known as the five Supermajors, to report their second-quarter results.
Although BP's second-quarter profits halved, oil and gas production was up 4 percent and its cost saving target was raised to $3 billion, from $2 billion.
INVENTORIES
Investors were awaiting U.S. weekly oil inventories in which a Reuters poll forecast a 300,000-barrel drop in crude stocks and a 600,000-barrel fall in gasoline. Distillates stocks are projected to have risen by a hefty 1 million barrels.
"The inventory data could definitely be market moving overnight especially when refiners have shut down some capacity due to maintenance work," Fritsch said.
The American Petroleum Institute data is scheduled for late Tuesday, while the report from the U.S. Energy Information Administration (EIA) is due out on Wednesday.
The chief executive of state oil giant Saudi Aramco expressed confidence on Tuesday the global fall in oil demand was temporary and that consumption growth would eventually resume.
Khalid al-Falih also said in comments published in the al-Hayat newspaper that oil output capacity touched 12 million barrels per day last month when three new oilfield projects started, one of which is the Shaybah oilfield expansion.
Investors were awaiting with caution Friday's U.S. GDP data, expected to show a fourth-straight quarter of contraction.
U.S. crude oil is expected to average nearly $73 a barrel in 2010, a Reuters poll showed on Tuesday, as oil demand improves, albeit at a sluggish pace.
