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Crude Rises; Inventory Decline Expected

July crude gained 55 cents, or 0.8%, to settle at $71.99 a barrel a day ahead of government data that's projected to show a weekly drop in crude supplies.

NEW YORK (

TheStreet

) -- The energy sector was among the strongest of Tuesday's market session as oil futures rose ahead of inventory reports that are expected to show a weekly decline in supply levels.

The July delivery crude contract, which traded as high as $72.40 a barrel, settled 55 cents, or 0.8% higher at $71.99 a barrel. The rise came after

Federal Reserve

Chairman Ben Bernanke said late Monday that a double-dip recession for the U.S. economy is unlikely.

Although U.S. equities ended Tuesday's session mixed after lacking direction for most of Tuesday's session, the

Dow Jones Industrial Average

accelerated gains in the

final hour of trading

, finishing 123 points higher.

The energy sector was among the day's best performers with the NYSE Arca Oil index gaining 0.4% and the Philadelphia Oil Service Sector index rising 0.9%. That came despite weakness across

oil drillers as

Transocean

(RIG) - Get Report

,

Atwood Oceanics

(ATW)

and

Diamond Offshore Drilling

TST Recommends

(DO) - Get Report

were downgraded by Goldman Sachs. Diamond Offshore got hit particularly hard Tuesday, losing 3.8%, and putting it among the

S&P 500's

worst performers on unconfirmed reports that one of its rigs is leaking oil.

BP

(BP) - Get Report

shares also got hammered, dropping nearly 6%. Although the company said its cap is successfully collecting oil, President Obama has been taking a more aggressive stance toward BP, and the White House said Monday that BP would be spending billions in oil spill-related penalties.

On the Dow,

Exxon Mobil

(XOM) - Get Report

was among the day's top three best performing stocks, but fellow component

Chevron

(CVX) - Get Report

was among its top three laggards. Exxon Mobil gained 3.3%, while Chevron lost 0.5%.

A weaker dollar lent some support to oil prices as it slipped 0.2% against a basket of foreign currencies, according to the dollar index.

On the fundamental data front, the American Petroleum Institute said crude oil supplies shed 4.54 million barrels in the week ended June 4. Analysts surveyed by Platts had been expecting a milder decline of 1.3 million barrels.

On Wednesday morning, the government's Energy Information Administration is set to release its own inventory report. In addition to the drop in crude stocks, analysts are also projecting a 430,000-barrel increase to gasoline supplies and an additional 550,000 barrels of distillates, according to the Platts poll.

Elsewhere on the Nymex, July natural gas futures lost 11 cents, or 2.2%, to settle at $4.81 per million British thermal units. Meanwhile, heating oil for July delivery slipped 0.2% lower to settle at $1.97 a gallon, and July gasoline shed a penny, or 0.3%, to settle at $1.99 a gallon.

--Written by Melinda Peer in New York

.