By Christopher Johnson
Europe, Asian stock markets, good corporate results and better economic data peps oil prices.
Oil rose above $64 a barrel on Thursday, boosted by stock markets in Europe and Asia, better than expected corporate results and data suggesting the economic downturn was bottoming out.The rally followed a drop of almost six percent on Wednesday in the wake of US data showing a big jump in crude inventories and on concerns over the outlook for Chinese economic growth following a fall in its stock markets.
US light crude oil futures rose 87 cents to $64.22 per barrel by 02.29pm, UAE time, after dropping 5.8 percent on Wednesday, the biggest daily percentage fall since April 20.
London Brent jumped even more strongly, rising to a high of $67.89, up $1.36 per barrel.
Stock markets rallied in Europe and Asia on Thursday, supported by positive economic data and good corporate results.
In Europe, BT and France Telecom both posted better than expected results, while in Asia, the Nikkei average hit its highest close in nine months on Thursday, lifted by Honda Motor and Nissan Motor profits.
Euro zone economic sentiment increased in July to its highest level in eight months, data showed on Thursday, a sign that recession in Europe is easing.
"Stock markets are higher this morning and we had a big sell-off, maybe too big a sell-off, on crude yesterday," said Christopher Bellew, oil broker at Bache Commodities in London.
"Certainly we can live with crude between $60 and $70 per barrel and we have come down towards the bottom end of that range this week," he added.
Oil fell sharply on Wednesday after the Energy Information Administration (EIA) said crude stocks in the world's top energy consumer rose an unexpected 5.1 million barrels to 347.8 million while refineries scaled back faster than anticipated.
Distillate stocks rose to the highest level in nearly 25 years, while gasoline stockpiles fell, the EIA said.
Over the past four weeks, US fuel consumption has dropped 4.1 percent from year-ago levels, led by a 10.7 percent decline in demand for distillates.
Inventories at Cushing, Oklahoma, a large storage hub and delivery point for U.S. crude futures, are now close to operable capacity, industry sources say.
A glut at Cushing earlier this year prompted U.S. crude futures to trade at exceptional discounts to Europe's Brent crude. U.S. light crude oil for September delivery was discounted by more than $3.60 a barrel to Brent on Thursday.
Traders said they were also watching for any measures by China that could impact industrial growth and fuel demand.
Chinese shares suffered their deepest daily decline in eight months on Wednesday on fears that Beijing might move to tighten money supply and banks could begin to restrict lending.
China's central bank said on Thursday it would keep a loose monetary policy to consolidate its recovery.
Adding to uncertainty in the oil market was news the US Commodities Futures Trading Commission was considering implementing position limits for some commodity futures after wide price swings that have raised concern over speculation.
Some traders have said they are worried U.S. regulators may impose limits on futures positions, which could push investors away from exchange-based oil trading in contracts such as NYMEX US light crude oil. (Reuters)