Oil rises to near $65 on strong corporate results

[July 20, 2009]  LONDON (AP) -- Oil prices were headed toward $65 a barrel Monday as strong second quarter company results helped boost investor optimism and stock market gains in Asia and Europe helped lift oil prices. A weaker U.S. dollar boosted oil as well.

By midday in Europe, benchmark crude for August delivery was up $1.07 to $64.63 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract jumped $1.54 to settle at $63.56.

Better than expected earnings last week from Goldman Sachs Group Inc., Intel Corp. and JPMorgan Chase & Co. eased some investor doubts about the chances of a U.S. economic recovery this year. Traders will be watching results this week from Apple Inc, Amazon.com Inc. and Microsoft Corp. for further clues about economic growth.

"Sentiment has been helped a great deal by the earnings reports so far," said Victor Shum, an energy analyst at consultancy Purvin & Gertz in Singapore. "If the remaining reports paint an upbeat picture, that could sustain oil."

Oil has bounced from $58.78 a barrel last week after falling from an eight-month high of $73.23 on June 30.

On Monday, stock markets closed higher in Asia and were also showing gains of at least 1.5 percent in most leading European markets.

Oil and other commodities also increased their attractiveness to investors looking for protection against inflation and dollar weakness. The euro was up to $1.4225 from $1.4139 late Friday in New York, while the British pound rose to $1.6505 from $1.6382 on Friday

Investors remain concerned about weak crude demand. Rising inventories of oil products, such as gasoline, suggest the recession has kept some U.S. drivers from hitting the road this summer..

"Weak fundamentals should keep a lid on prices," Shum said. "We have a glut of oil products."

JBC Energy in Vienna said it did "not expect the recent recovery in oil prices to last for long as it has been led by premature optimism rather than by fundamentals."

In other Nymex trading, gasoline for August delivery rose 2.1 cents to $1.7909 a gallon and heating oil gained 3.4 cents to $1.675. Natural gas for August delivery jumped 8.2 cents to $3.751 per 1,000 cubic feet.

In London, Brent prices rose 97 cents to $66.35 a barrel on the ICE Futures exchange.

[Associated Press; By PABLO GORONDI]

Associated Press writer Alex Kennedy in Singapore contributed to this report.

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