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Oil extends gains on US recovery hopes

business Updated: Aug 03, 2009 08:25 IST
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Oil advanced further in Asian trade Monday, still cheered on by data showing the US economy contracted at a slower-than-expected pace in the second quarter, analysts said.

New York's main contract, light sweet crude for September delivery, rose 17 cents to 69.62 dollars a barrel.

Brent North Sea crude for September delivery advanced 48 cents to 72.18 dollars.

Both contracts had closed higher Friday, buoyed by data from the Commerce Department that showed the US economy shrank at an annualised rate of 1.0 percent in the three months to June.

That was less than the 1.5 percent contraction that most analysts had expected, renewing hopes that the world's biggest economy was likely recovering from a recession that began in December 2007.

The United States is the world's number one energy user and any improvement in its economy is seen as a boost to oil demand, which in turn lends support to crude futures prices.

Top US administration officials said Sunday that economic growth was highly likely to resume in the second half of the year and that President Barack Obama's massive 787-billion-dollar stimulus plan was working.

"A very great likelihood, and this is what most professional forecasters say, is that we'll see growth going forward in the second half of this year," White House economic adviser Larry Summers said in an interview with NBC television.

Former Federal Reserve chairman Alan Greenspan told ABC television Sunday the worst US financial crisis in a half a century was "not quite" over, "but we're getting there."

Greenspan said he was "pretty sure" the broader US economy had hit the bottom and begun to turn around in mid-July.

Analysts said the release of US non-farm payroll numbers and manufacturing data, due
out later Monday, were the key items being watched by investors.

"Looking ahead, August will rely more on economic data to support risk appetite in equities and currencies as the corporate earnings season winds down," analysts from Singapore's DBS Bank said in a report.