Oil prices rally as equities bounce
World oil prices rallied on Wednesday as traders tracked rising equity markets ahead of a key US inventories report.
New York's main contract, light sweet crude for August delivery, added 1.53 cents to 73.51 dollars per barrel.
Brent North Sea crude for August gained 1.50 cents to 72.95 dollars.
VTB Capital analyst Andrey Kryuchenkov said that the oil market was responding to "a rebound in equities."
European stock markets recovered late on Wednesday, bouncing back into positive territory after initial gains on Wall Street.
"This turnaround (in equities) was driven mainly through an upbeat statement from US bank State Street, which forecast that its second quarter earnings would beat market expectations," said City Index analyst Joshua Raymond.
"This has raised optimism that the forthcoming bank earnings season in the US will tread a similar path and outperform too."
Earlier in the day, oil prices fell as the market was weighed down by the stronger dollar and downbeat US economic data.
A strengthening dollar makes dollar-priced crude more expensive for buyers using weaker currencies. In turn, that tends to weigh on demand and prices.
Kryuchenkov said the market was awaiting US energy inventory data and an interest rate decision from the European Central Bank on Thursday.
The US Department of Energy's weekly oil report will be published on Thursday, one day later than normal owing to a public holiday on Monday.
Oil reserves are forecast to have fallen by 1.8 million barrels in the week ending July 2, according to analysts polled by Dow Jones Newswires, after Hurricane Alex disrupted some Gulf of Mexico production last week.
On Tuesday, oil prices sank for the seventh session running on Tuesday after a steeper-than-expected slowdown in the US Institute for Supply Management's non-manufacturing index.
The index declined to 53.8 points last month from 55.4 in May. Most economists had expected the June figure to be 55.
© 2010 AFP