Oil hovers near $75 as global stocks rally

[August 30, 2010]  SINGAPORE (AP) -- Oil prices hovered near $75 a barrel Monday in Asia, buoyed by rallying global stock markets and improving investor sentiment.

Benchmark crude for October delivery was down 38 cents at $74.79 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.81 to settle at $75.17 on Friday.

Federal Reserve Chairman Ben Bernanke said Friday the central bank was ready to step in if the U.S. economy showed further signs of weakening. Bernanke's comments sparked a stock market rally, with the Dow Jones industrial average jumping 1.7 percent Friday.

Most major European and Asian stock markets followed the U.S. lead and rose Monday. They also got a boost from Japan's central bank deciding at an emergency board meeting to further ease monetary policy by extending more cheap loans to financial institutions.

Oil traders often closely watch equities as a gauge of overall investor sentiment.

"Markets got the clarity they wanted," DBS bank said in a report. "The Fed will cut if it needs to."

Some analysts remain concerned about the U.S. economy, which grew 1.6 percent in the second quarter, down from 3.7 percent growth in the first.

Oil prices have bobbed near $75 for most of the past year as the global economy recovered from last year's recession, but developed countries struggle to regain strong growth.

In other Nymex trading in September contracts, heating oil fell 0.67 cent to $2.038 a gallon and gasoline added 0.31 cent to $1.951 a gallon. Natural gas for October delivery was steady at $3.704 per 1,000 cubic feet.

Brent crude was down 55 cents to $76.10 a barrel on the ICE futures exchange.

[Associated Press; By ALEX KENNEDY]

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