Oil prices rally on rising equities, weak dollar
World oil prices rallied on Thursday, as rising European stock markets and a weak dollar led traders to shrug off a massive increase in US crude reserves, analysts said.
New York's main contract, light sweet crude for October delivery, added 87 cents to 73.39 dollars a barrel.
Brent North Sea crude for October won 1.05 dollars to 74.54 dollars a barrel in midday London trade.
"Crude oil prices extended gains and surged above 73 dollars per barrel in a correction higher, supported by a softer US dollar and further gains across the global equity markets," said Sucden analyst Myrto Sokou.
Stock markets rebounded on Thursday following a run of losses as traders digested a brighter outlook for the global economy following the release of positive economic data and earnings.
In foreign exchange trade, the dollar eased to 84.53 yen from 84.59 late in New York on Wednesday. The euro rose to 1.2707 dollars from 1.2655.
A weaker greenback entices buyers using rival currencies to snap up dollar-denominated crude because it becomes cheaper to buy.
Crude futures had also gained ground on Wednesday, despite dismal US economic data and a spectacular jump in American crude reserves that signaled weaker demand in the United States -- the world's biggest oil-consuming nation.
The US government's Department of Energy (DoE) said crude stockpiles surged 4.1 million barrels last week. That confounded market expectations for a 200,000-barrel drop, according to analysts polled by Dow Jones Newswires.
Gasoline (petrol) stockpiles rose 2.3 million barrels, against forecasts for a 500,000-barrel decline.
Distillates, including diesel and heating fuel, gained 1.8 million barrels when analysts had pencilled in a rise of 900,000 barrels.
Markets were also rattled on Wednesday after US data showed that new home sales in July plunged by 12.4 percent from a month earlier to the lowest level since 1963, shattering analysts' expectations for a modest rise.
© 2010 AFP