Oil prices rose above $96 a barrel Tuesday in Asia amid expectations U.S. crude supplies dropped last week, a sign demand may be improving.

Benchmark oil for August delivery was up 66 cents to $96.59 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude fell $1.31 to settle at $95.93 on Monday.

In London, the September contract for Brent crude rose 17 cents to $116.22 per barrel on the ICE Futures exchange.

Crude inventories likely fell 1.3 million barrels last week while gasoline supplies probably dropped 450,000 barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.

The American Petroleum Institute is scheduled to report its weekly supply data later Tuesday while the Energy Department's Energy Information Administration releases its report Wednesday.

Some analysts are concerned Europe's debt crisis and the lack of an agreement so far among lawmakers to raise the U.S. debt ceiling could undermine global financial stability and economic growth.

"The global economy simply faces too many serious headwinds for us to believe that growth rates will accelerate in second half of 2011 and the start of 2012," energy analyst Richard Soultanian of NUS Consulting said. "It will be sluggish at best and, at worst, we could see the start of a double dip recession."

In other Nymex trading in September contracts, heating oil added 2.0 cents to $3.11 a gallon while gasoline gained 2.0 cents at $3.07 a gallon. Natural gas futures for August delivery advanced 1.8 cents at $4.56 per 1,000 cubic feet.