Oil above $72 as traders eye economic recovery

Oil prices hovered above  $72 a barrel today in Asia near an 8-month high as investors eyed signs that the global recession may be easing.

Benchmark crude for July delivery fell 31 cents to $72.37 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange. Yesterday, it rose $1.35 to settle at $72.68, the highest since October.

An improving crude demand outlook helped bolster prices. yesterday, the International Energy Agency in Paris said in its monthly survey that global oil demand would fall by 2.9 percent this year, better than its May forecast of a 3 percent annual fall.

It was the organisation's first upward estimate of demand in 10 months.

"Oil prices are discounting positive economic growth by around the end of the third quarter," said Christoffer Molke-Leth, head of sales trading for Saxo Capital Markets in Singapore. "If that doesn't happen, prices at this level are overbought."

Prices have more than doubled since March as investor optimism grew that the worst of a severe US recession was over.

The Labor Department yesterday reported that the number of newly laid-off Americans filing for jobless benefits fell last week by 24,000 to 601,000 - better than economists had forecast.