Benchmark crude for July delivery was up 98 cents at US$69.07 a barrel by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. On Monday, it fell 35 cents to settle at US$68.09.

Oil prices have joined a surge in equity markets on investor optimism that the worst of a global recession is over. Crude touched above US$70 a barrel last week, the highest since October.

However, crude inventories remain near 19-year highs and demand in the US, the world's largest consumer of oil, is sluggish.

'There continues to be some economic optimism out there,' said Mr Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. 'Investors have brushed aside any near-term concerns about the weak oil market fundamentals.'

Wednesday's release of petroleum inventory data from the Energy Department's Energy Information Administration could provide some insight about crude demand. Analysts expect a rise of 800,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos. Stocks unexpectedly rose last week after dropping the previous three weeks.

'If the oil inventory report shows a crude draw, we're likely to test US$70 again,' Mr Shum said.

Traders are also eyeing the US dollar, as a weaker American currency would bolster prices since investors often look to commodities such as crude as a hedge against inflation. The euro was steady at US$1.3941 on Tuesday.

In other Nymex trading, gasoline for July delivery was steady at US$1.94 a gallon and heating oil rose 1.25 cents to US$1.78. Natural gas for July delivery was down 2.7 cents at US$3.70 per 1,000 cubic feet.

In London, Brent prices gained 96 cents to US$68.84 a barrel on the ICE Futures exchange. -- AP