Oil rebounds to near $77 on EU loan package

Oil prices rebounded to near $77 a barrel today in Asia from last week's 14 per cent sell-off after Europe and the IMF pledged nearly $one trillion to help defend the embattled euro.

Benchmark crude for June delivery was up $1.74 to $76.85 a barrel at midday Singapore time in electronic trading on the New York Mercantile Exchange. The June contract fell $2 to settle at $75.11 on Friday.

The European Union Commission and International Monetary Fund pledged a euro 750 billion loan package today after the euro plunged last week amid investor concerns a debt crisis in Greece could spread to other European countries.

Crude prices are down from an 18-month high of $87.15 a barrel early last week as the debt crisis battered the euro, which rallied Monday to $1.2944 from $1.2759.

Commodities priced in dollars, such as oil, become less expensive for investors holding euros as the US currency weakens.

"The EU rescue package has calmed financial markets for now," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "Equities are going up, the dollar is coming down and oil is reacting to that".

Asian stocks rose in early trading today after falling most of last week.

"Last week's drop left oil oversold," Shum said. "We expect prices to creep back above $80, possibly this week".

In other Nymex trading in June contracts, heating oil rose 3.84 cents to $2.118 a gallon, and gasoline added 3.46 cents to $2.160 a gallon. Natural gas gained 1.4 cents to $4.029 per 1,000 cubic feet.

In London, Brent crude was up $1.73 to $80.00 on the ICE futures exchange.