Oil nears $76 on upbeat outlook for global economy

I / Singapore July 09, 2010, 9:50 IST

Oil traded near $76 in Asia today, lifted by buoyant sentiment after the International Monetary Fund bumped up its projections for global growth.

Stronger demand in the United States, shown by a drop in crude inventories, also helped push prices higher, analysts said.

In morning Asian trade, New York's main contract, light sweet crude for delivery in August, was up 30 cents to $75.74 a barrel, and Brent North Sea crude gained 33 cents to $75.04.

The IMF yesterday upgraded its global growth forecast for this year despite renewed financial turbulence stemming from a European debt crisis.

It projected the world economy would expand by 4.6 per cent, up from its 4.2 per cent forecast in April, reflecting "stronger activity" during the first half of 2010 and expectations of fiscal action, especially in Europe.

The fund maintained its 2011 growth forecast at 4.3 per cent.

Stronger world growth means greater demand for oil as economic activities expand, analysts said.

The market also had a boost from a report by the US Department of Energy showing that American crude oil reserves plunged by almost 5 million barrels in the week ending July 2, beating forecasts.

And there was fresh US data showing a decline in the number of Americans registering for jobless benefits.

"The economic outlook is not as bad as many now seem to assume," said Capital Economics analyst John Higgins, referring to the US economy.

The pace of the rebound in the world's biggest economy "has shifted into a lower gear" but growth is likely to top 3.5 per cent at an annualised rate in the second half of 2010, and be around 2.5 per cent in 2011, he said in a market commentary.

"This would be a far cry from a renewed slide into recession."