Oil above $77 amid improving US economy

[February 17, 2010]  SINGAPORE (AP) -- Oil prices extended gains 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 50 cents at $77.51 a barrel at late afternoon 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 1 cent at $2.01 a gallon, and gasoline rose 1.1 cent to $1.999 a gallon. Natural gas gained 6 cents to $5.37 per 1,000 cubic feet.

In London, Brent crude was up 40 cents at $76.08 on the ICE futures exchange.

[Associated Press; By ALEX KENNEDY]

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