Oil prices rose to near $76 a barrel on Friday in Asia, following stock markets higher as confidence rose the global economic recovery remains intact.
Benchmark crude for August delivery was up 47 cents to $75.91 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.37 to settle at $75.44 on Thursday.
Signs the global economic recovery remains on track eased fears of a new recession and helped boost investor confidence.
The Labor Department said on Thursday that initial jobless claims fell last week to the lowest level since early May, and the International Monetary Fund raised its 2010 world growth forecast to 4.6 per cent from 4.2 per cent.
All major Asia stock markets rose on Friday after the Dow Jones industrial average gained 1.2 per cent Thursday. Oil traders often look to equities as a gauge of overall investor sentiment.
US crude supplies dropped last week, suggesting oil demand could be improving.
Crude inventories plunged 5.0 million barrels, the Energy Department's Energy Information Administration said Thursday, more than a drop of 3.5 million barrels forecast in an analyst survey by Platts, the energy information arm of McGraw-Hill Cos.
However, inventories of gasoline and distillates rose, the EIA said.
"Given the strength of the fundamentals, we would state that something in the region of $80 or above is more befitting" the oil price, Barclays Capital said in a report.
In other Nymex trading in August contracts, heating oil rose 1.17 cents to $2.0170 a gallon, gasoline gained 1.36 cents to $2.0647 a gallon and natural gas was steady at $4.407 per 1,000 cubic feet. Brent crude was up 44 cents to $75.15 a barrel on the ICE futures exchange.