Oil prices touch 80 dollars a barrel in Asia on US growth | business | Hindustan Times
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Oil prices touch 80 dollars a barrel in Asia on US growth

business Updated: Oct 30, 2009 13:32 IST

Oil prices hovered near 80 dollars a barrel in Asian trade on Friday on news the United States has emerged from a long and painful recession after posting its strongest growth in two years.

New York's main contract, light sweet crude for December delivery, was trading at 79.92 dollars in afternoon trade, up five cents from the previous day. It had touched an intra-day high of 80.21 dollars.

Brent North Sea crude for December turned lower at 77.98 dollars, down six cents.

After four consecutive contractions, the world's largest economy grew at a seasonally adjusted 3.5 percent in the September quarter from the previous three months, the Commerce Department said.

The rise was the biggest since the 2007 third quarter, when the subprime mortgage market sparked a global financial crisis that spilled over into the world economy.

"The US third quarter GDP results were very positive and some of the early concerns about the pace of economic recovery therefore eased," said Victor Shum, senior principal at energy consultancy Purvin and Gertz in Singapore.

"Oil is hanging around 80 dollars and traders are now looking for more economic data to confirm this positive GDP result."

Shum said that fragile global demand amid an oversupply of crude meant that oil's inability to sustain prices above 80 dollars a barrel was unsurprising.

"Oil at this pricing level is on shaky ground," he said.

The United States' third quarter growth confirmed that "the most severe and longest recession since the 1930s is over," said research house Capital Economics.

"We expect economic growth to continue at about the same pace for the next few quarters as pent-up investment demand is released, inventories are restocked and the boost from the fiscal stimulus continues."

The United States is the world's biggest energy consumer and the health of its economy and the consumption patterns of Americans are key influences in the oil market.

Crude prices tumbled from peaks of more than 147 dollars a barrel in July 2008 to around 30 dollars in December on falling demand due to the recession that followed the collapse of US investment bank Lehman Brothers.