NEW YORK (AP) -- Oil prices moved higher Tuesday as traders tried to get a handle on whether weak, short-term demand for crude could eventually push prices down.
Benchmark crude for July delivery rose 66 cents to $72.10 a barrel in midday trading on the New York Mercantile Exchange. The contract lost 7 cents to settle at $71.44 on Monday.
The Skanner Video click here
"It's kind of real mess in the oil market because it doesn't know what it wants to follow,'' PFGBest analyst Phil Flynn said.
In contrast, BP share prices took a dive Wednesday, amid possible criminal probes into the company's conduct.
The European debt crisis and abundant supplies of crude and refined products in the U.S. pushed oil down from an 18-month high of $87 a barrel in the past month. European governments have announced plans to cut spending, and in the world's largest auto market -- China -- car sales in May grew at the slowest rate in more than a year. Both developments could curtail oil demand.
At the same time, Federal Reserve Chairman Ben Bernanke said he is hopeful that the U.S. will not fall back into recession. His comments helped support crude prices on Tuesday.
Analysts are worried about forecasts for hurricane season, which started last week, that -- along with a drilling moratorium in the Gulf of Mexico -- they fear could disrupt production of oil and natural gas in the Gulf and send oil prices higher this summer.
"As soon as the dollar drops, equity markets recover and the hurricanes hit the Gulf of Mexico, we could see a perfect storm for higher crude oil prices," oil analyst and trader Stephen Schork said in his daily report.
Coast Guard Adm. Thad Allen said Wednesday the oil spill containment operation in the Gulf of Mexico is now catching up to 630,000 gallons a day and that the amount could nearly double by next week as processing of the captured oil is expanded.
"We continue to make progress," Allen, who heads the BP oil spill response, said at a briefing.
He acknowledged that the amount of oil now being captured is close to exceeding the capacity of the processing ship that is on site. But he said a second vessel, where oil can be both stored and flared, is expected to be available soon. And an even larger vessel from the North Sea also is heading to the oil spill site.
"We'll be at 28,000 (barrels) by next week. We're building capacity," said Allen. That would mean 1.17 million gallons of oil a day would be captured, he said.
The Skanner Video click here
But officials still are unable to say how much oil is flowing from the broken wellhead a mile beneath the Gulf.
"I'm not going to declare victory on anything until I have absolute numbers," said Allen.
At a Senate hearing, meanwhile, Interior Department officials expressed confidence that more precise numbers on the flow rate will be available from a special task force of scientists, which is nearing completion of a review of earlier flow data and has been provided new high-resolution video.
"We expect to have a much better estimate (of oil flow) very soon," Deputy Interior Secretary David Hayes told senators at a hearing by the Senate Energy and Natural Resources Committee.
The task force earlier estimated that 500,000 to 1 million gallons a day are flowing from the broken wellhead, but Hayes said those numbers assume "a lot of uncertainty." Some independent scientists long have estimated higher numbers.
With oil expecting to gush for another two months, Allen said he wants a long-term containment strategy from BP "with built in redundancies" that would taken into account new risks posed by the upcoming hurricane season.
He said a huge, 1,000-foot-long vessel being brought in from the North Sea is similar to a production platform that can "lock into position" of the water surface and provide greater stability as it processes oil flowing from the damaged wellhead.
Allen also noted that he and other officials are meeting with BP later Wednesday to discuss problems with the handling of damage claims related to the April 20 accident.
He said claims brought by individuals for loss of business as a result of oil contamination "sometimes (is) hard to get a handle on" but that he will discuss the issue with BP officials to try to speed up the process.