Oil rises above $75 in Europe on stock market rise, weaker US dollar

The Associated Press ~ staff The News
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Oil prices broke above US$75 a barrel on Thursday as traders looked for guidance from stock and currency markets amid a muddled crude demand outlook.
By early afternoon in Europe, benchmark crude for March delivery was up 73 cents at $75.25 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose 77 cents to settle at $74.52 on Wednesday.
Oil has zigzagged recently - jumping about seven per cent since touching $69.59 a barrel on Friday after falling from $84 last month - as investors struggle to forecast crude demand amid a sluggish global economy.
Traders have instead been eyeing equity markets and the U.S. dollar. Most Asian and European stock markets rose Thursday while the euro strengthened to $1.3745 from $1.3731 on Wednesday.
Investors often buy commodities such as oil as a hedge against inflation, and a weaker dollar makes crude cheaper for traders holding other currencies.
"We have consistently emphasized a continued weak pace of demand beyond the emerging economies," Galena, Illinois-based Ritterbusch and Associates said in a report. "Extreme price volatility could be expected and a run at last week's highs at the $78 area is certainly possible."
"But, from a longer term view, we still expect fresh lows as we leave open the possibility of a strengthening dollar to new highs."
Supporting prices was the latest monthly report from the Paris-based International Energy Agency, which revised slightly higher its forecast for global oil demand in 2010, from a daily 85.3 million barrels to 85.5 million barrels.
In other Nymex trading in March contracts, heating oil rose 2.23 cents to $1.9692 a gallon, and gasoline added 1.43 cents to $1.9433 a gallon. Natural gas gained 8.7 cents to $5.379 per 1,000 cubic feet.
In London, Brent crude was up 94 cents at $73.48 on the ICE futures exchange.

Organizations: TSX, NYSE, New York Mercantile Exchange Ritterbusch and Associates International Energy Agency Nymex BP

Geographic location: Europe, U.S., London

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