Oil gains on US recovery hopes

SINGAPORE, Aug 13, 2009 (AFP) - Oil prices rose in Asian trade Thursday after the Federal Reserve said the recession-hit US economy was stabilising, analysts said.

New York's main contract, light sweet crude for September delivery, climbed 59 cents to 70.75 dollars a barrel.

Brent North Sea crude for September delivery rose 96 cents to 73.85 dollars.

Oil and US stocks rallied Wednesday after the Fed, at the conclusion of a two-day meeting, said that "economic activity is levelling out".

The policymaking Federal Open Market Committee (FOMC) maintained ultra-low interest rates, but said it would gradually end a program of Treasury bond purchases after completing a 300-billion-dollar scheme in October.

"FOMC kept rates unchanged and its statement was mostly in line with what markets had anticipated," said Dariusz Kowalczyk, Hong Kong-based chief investment strategist with SJS Markets.

"Policymakers seemed more confident that inventories are becoming better aligned with sales, a prelude to recovery in production," he said.

The US economy is the world's largest energy consumer and an economic recovery is seen as key to boosting global oil demand after the recession.

Latest government data on US energy reserves showed oil demand remained weak with crude inventories rising by 2.5 million barrels to 352 million barrels in the week ended August 7, more than triple the amount expected by analysts.

It was the third consecutive week of higher crude stockpiles.

The weekly Department of Energy report released Wednesday showed gasoline reserves fell by one million barrels to 211.9 million barrels, less than the 1.3 million barrel decline the market had expected.

The market closely monitors gasoline inventories during the US summer "driving season" when traffic normally rises as vacationers hit the highways.

Distillates inventories, including diesel and heating fuel, rose unexpectedly, by 800,000 barrels to 162.3 million. Analysts had forecast a decline of 300,000 barrels.

Source: AFP

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