Oil prices hovered below $78 a barrel Wednesday in Asia after a report showed U.S. crude supplies fell less than expected last week, suggesting demand for fuel remains tepid.

Benchmark crude for September delivery was up 25 cents to $77.83 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose 68 cents to settle at $77.58 on Tuesday.

The American Petroleum Institute late Tuesday said crude inventories fell 241,000 barrels last week against a drop of 1.6 million barrels forecast in an analyst survey by Platts, the energy information arm of McGraw-Hill Cos.

Inventories of gasoline also fell while distillates rose, the API said.

The Energy Department’s Energy Information Administration reports its weekly supply data later Wednesday.

Oil traders are also studying stock markets as a sign of overall investor sentiment. The Dow Jones industrial average rose 0.7 percent Tuesday and the S&P 500 gained 1.1 percent on positive second-quarter earnings results.

“The earnings season will be an indicator for consumer health and thus their ability and willingness to spend at the pump,” energy analyst and trader the Schork Group said in a report. “The bottom line is that we will continue to watch the S&P as an indicator for crude oil.”

In other Nymex trading in August contracts, heating oil rose 0.93 cent to $2.0340 a gallon, gasoline gained 1.10 cents to $2.0896 a gallon and natural gas was steady at $4.591 per 1,000 cubic feet.

Brent crude was up 62 cents to $76.84 a barrel on the ICE futures exchange.

More In: Economy | Business | Markets