Oil hovers above $77 amid improving US economy
SINGAPORE: Oil prices hovered above $77 a barrel Wednesday in Asia after surging the previous day amid expectations a growing U.S. economy will fuel increased crude demand.
Benchmark crude for March delivery was up 37 cents at $77.38 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $2.88 to settle at $77.01 on Tuesday.
Oil and stocks were boosted by signs that U.S. consumer spending may be improving. On Tuesday, Kraft Foods Inc. and apparel retailer Abercrombie & Fitch reported earnings that beat expectations, helping to send the Dow Jones industrial average up 1.7 percent.
Oil prices have also been buoyed by low U.S. interest rates, as investors turn to commodities for trading profits.
"As long as short term interest rates remain near zero, a large amount of institutional capital will continue to look for a home and the energy complex remains as a compelling investment," Galena, Illinois-based Ritterbusch and Associates said in a report.
In other Nymex trading in March contracts, heating oil was up 0.8 cent at $2.004 a gallon, and gasoline rose 1.3 cents to $2 a gallon. Natural gas gained 4.4 cents to $5.354 per 1,000 cubic feet.
In London, Brent crude was up 31 cents at $75.99 on the ICE futures exchange.