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Oil edges up towards $76 on weaker dollar

Oil edged higher towards $76 a barrel on Monday with a boost from a weaker dollar, but concerns about faltering economic recovery in some big oil-consuming nations capped gains.

business Updated: Aug 16, 2010 18:20 IST

Oil edged higher towards $76 a barrel on Monday with a boost from a weaker dollar, but concerns about faltering economic recovery in some big oil-consuming nations capped gains.

Japan's economy expanded by a mere 0.1 per cent in the second quarter. That followed a string of tepid US indicators last week that helped oil prices fall by more than 6 per cent, the biggest weekly drop since early July.

"It's quite natural to see a rebound after such a strong decline earlier," Commerzbank analyst Carsten Fritsch said of oil's small rally.

"Gains should be limited as the negative fundamentals prevail -- (including) a sharp growth slowdown in Japan, still the third-largest oil consumer in the world."

US crude climbed 17 cents to $75.56 a barrel at 1149 GMT. Prices had touched $75.01 on Friday, the lowest for a nearby contract since July 13. Brent crude gained 15 cents to $75.26.

Financial markets gave mixed signals for oil. European stocks fell as concern re-emerged about global economic growth and Wall Street was expected to open lower.

But the dollar weakened against a basket of currencies, making oil cheaper for holders of other currencies.

Data due on Monday that could offer clues on the strength of the US economy are the New York Fed's Empire State Manufacturing Survey at 1230 GMT and the National Association of Home Builders housing market index at 1400 GMT.

Oil last week also fell because of a rise in US jobless claims and sustained gains in the nation's fuel inventories, further signs energy demand may be trailing economic recovery in the world's top oil consumer.

Still, European economic growth accelerated in the second quarter of 2010 as Germany's best growth performance since reunification more than made up for the struggles of Spain, Ireland and recession-ravaged Greece.

On the weather front, an area of low pressure moving over the Florida Panhandle was expected to track southward into the northern Gulf of Mexico by early Monday and had a 50 per cent chance of becoming a tropical cyclone in the next 48 hours, the National Hurricane Center said on Sunday.

The Gulf is home to about 30 per cent of US oil production, 11 per cent of natural gas output and more than 43 per cent of US refinery capacity.

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