London: Oil rose back above $71 a barrel on Thursday after positive economic news from the United States and Europe’s two largest economies, despite data showing US crude inventories rose much more than expected last week.
US light crude for September delivery rose $1.25 cents to $71.41 a barrel by 1:49pm, having ended a four-day falling streak on Wednesday.
London Brent crude gained $1.10 to $73.99.
Gross domestic product (GDP) in France and Germany, the euro zone’s two biggest economies, rose by 0.3 percent each in the second quarter against expectations for a decline of 0.3%.
The unexpectedly bullish news added to sentiment that the worst of the deepest financial crisis in decades was over, particularly after the US Federal Reserve made its clearest statement yet that it sees the recession nearing an end.
This in turn pressured the dollar, as investors moved to riskier assets, including commodities, after the Fed on Wednesday held its benchmark rate near zero and said it would likely keep it there for an extended period to guide the way to recovery.
US crude inventories rose much more than expected last week on higher imports and lower demand from domestic refiners, US Energy Information data showed on Wednesday. But forecasts that an oil demand recovery is at hand led traders to shrug off the bearish weekly data from the world’s biggest consumer of energy.
Analysts at Barclays Capital forecast a bullish upswing in global oil demand, seven times larger than the forecast from the International Energy Agency, although they said there was continuing upside risk.
“In the US, a swing up in industrial output, consumer sales, final sales and a turn in the wholesale goods inventory argue for an impending sharp change in the underlying dynamic of US oil demand,” Barclays Capital said in its weekly oil data review.
Potentially tightening supplies and adding support, reports from the US National Hurricane Center said the Atlantic could get its first named storm of the year as a tropical depression strengthens on a track toward the US Virgin Islands.
Tropical storms and hurricanes can disrupt the operations of offshore oil platforms and coastal refineries.