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Oil tops $72 on equity rebound, U.S. demand

business Updated: May 27, 2010 17:33 IST

Crude oil prices rose above $72 on Thursday, supported by gains in Asian and European equity markets and after the previous day's U.S. official oil data showed some increase in fuel demand.

Market focus will shift later on Thursday to preliminary first-quarter Gross Domestic Product figures from the United States, the world's largest economy and top energy consumer, for continued evidence of recovery.

By 0900 GMT, U.S. crude futures for July had risen $1.12 to $72.63 a barrel. ICE Brent crude futures gained 73 cents to $72.47. On Wednesday U.S. crude jumped 4 percent, its biggest one day percentage gain in over three months, after data from the Energy Information Administration showed an increases in U.S. demand for refined oil products such as gasoline and diesel.

"Today, U.S. demand does still play a part," Christopher Bellew with Bache Commodities said. "Macro economic data is absolutely the most important, also confidence in the recovery is reflected in prices for equities," he added.

U.S. crude rose to a premium to ICE Brent crude for the first time since mid-April. It fell to a discount as deep as $6.57 in mid-May due to a build-up in inventories at storage in Cushing, Oklahoma. But crude was helped higher after Wednesday's data showed inventories at Cushing, the physical delivery point of U.S. crude, had fallen from record high levels.

Barclays Capital analyst Paul Horsnell noted the rise in U.S. diesel demand in the weekly report. As diesel is used for large trucks, its demand is often used as a gauge of the health of economic activity.

U.S. GDP data for the first quarter will be released at 1230 GMT. Analysts in a Reuters poll forecast 3.4 percent growth. Asian and European shares rose on Thursday mainly because China denied a report it was reviewing its investments in euro zone debt.