August contract reclaims $65 mark on verge of Tuesday expiration By Polya Lesova, MarketWatch NEW YORK (MarketWatch) -- Crude-oil futures rose above $65 a barrel on Tuesday, tracking gains in U.S. stocks expected at the start of trading on Wall Street, as investors awaited data that's expected to show a decline in crude inventories. Light sweet crude for August delivery gained $1.11, or 1.7%, to $65.09 a barrel in electronic trading on Globex. The contract will expire at the end of Tuesday's trading. Crude for September delivery also rose, up 83 cents to $66.12 a barrel on Globex. This contract registered much more volume than August crude. But analyst Nimit Khamar, for one, isn't convinced that oil's upward move can be sustained. "The fundamental picture looks bleak and far too much uncertainty remains on the demand outlook, so a move lower is possible," said Khamar, of Sucden Financial Research. "However, given the [oil] market is mainly driven by financial markets and economic sentiment for now, and not [by] oil fundamentals, further gains cannot be ruled out, although a rally based on this comes with an increased risk of a sharp correction," Khamar wrote in a note to clients. U.S. stock futures looked poised for further gains, with the market digesting a host of key earnings reports and Federal Reserve Chairman Ben Bernanke's message that the central bank will be vigilant to curtail inflation. See Indications. Bernanke took the surprise out of his testimony in front of Congress, due for 10 a.m. Eastern, saying in a Wall Street Journal op-ed that the Fed will act decisively to prevent excess money growth from stirring up inflation once the economy recovers. See story. August crude ended 42 cents higher at $63.98 a barrel Monday, also tracking the gains in U.S. equities. See full story. "The correlation between the two markets has been very close over the past two months, with crude oil and the S&P 500 practically moving in lockstep with each other," wrote Edward Meir, analyst at MF Global, in a research note. In other news, Chakib Khelil, Algeria's energy and mines minister, said Monday that the OPEC oil cartel will have to vote to cut production at its meeting in September if there isn't enough demand for oil, Reuters reported. Energy traders are awaiting data on petroleum inventories. The American Petroleum Institute will release its report on supplies on Tuesday afternoon, while the Energy Information Administration will release its more closely watched data Wednesday morning. Analysts surveyed by Platts expect a decline of 2 million barrels in crude stockpiles and an increase of 800,000 barrels for gasoline. They also project an increase of 1.4 million barrels in distillate supplies. "The draw from stocks could be higher than 2 million barrels as more oil was deposited into the Strategic Petroleum Reserve, the U.S. government's safety-net supply of oil," said Linda Rafield, Platts senior oil analyst, in a statement. An additional 700,000 barrels was put in the SPR during the week ended July 10, she said. Also on Globex, August reformulated gasoline rose 3 cents to $1.81 a gallon and August heating oil gained 3 cents to $1.72 a gallon. August natural gas futures fell 3 cents to $3.66 per million British thermal units.

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