Oil rebounds in line with equities
World oil prices rallied on Wednesday, with sentiment lifted by rebounding global stock markets as traders awaited the latest weekly snapshot of US energy inventories.
New York's main contract, light sweet crude for delivery in July, soared 1.76 dollars to 70.51 dollars a barrel.
London's Brent North Sea crude for July jumped 1.50 dollars to 71.12 dollars.
Oil bounced as dealers were heartened by strong performances on world stock markets on Wednesday.
"Oil is taking its cue from equities," said Victor Shum, senior principal of Purvin and Gertz energy consultants in Singapore.
Global stock markets staged a recovery on Wednesday as many investors went bargain hunting after huge recent falls but gains were capped by eurozone and Korea concerns.
In morning European trade, Frankfurt jumped 1.70 percent, London soared 1.91 percent, Madrid rose 2.20 percent and Paris gained 2.64 percent. However, these markets failed to fully reverse Tuesday's heavy losses.
In Asian trade, Tokyo rallied 0.66 percent, Sydney picked up 0.98 percent and Shanghai added 0.31 percent.
"The fear factor that drove markets plunging (Tuesday) ... has subsided, therefore we are seeing equities and oil prices heading up ... Enough investors felt it was oversold," Shum said.
Rising tensions on the Korean peninsula and fears that the European debt crisis could torpedo economic recovery sent stock markets plummeting Tuesday.
Shum warned, however, that oil prices could remain volatile until the underlying issues are resolved.
Later Wednesday, the US government's Department of Energy will publish its key report on American energy reserves for the week ending May 21.
"Today the market is likely to briefly turn its attention to fundamentals" of supply and demand, said VTB Capital analyst Andrey Kryuchenkov.
The report is a key weekly event for traders because the United States is the world's biggest energy consumer, followed by number two China.
© 2010 AFP