Oil rose towards $71 a barrel this morning as a surprising return to economic growth in France and Germany fed optimism the world was through the worst of the recession, offsetting bearish US inventory data.
Gross domestic product (GDP) in the euro zone's two biggest economies rose by 0.3 per cent each in the second quarter against expectations for a decline of 0.3 per cent.
The unexpected bullish news fuelled sentiment that the worst was over after the US Federal Reserve said yesterday the US economy was showing signs of levelling out two years after the onset of the deepest financial crisis in decades.
Japan's Nikkei index settled up 0.79 per cent while Asian stocks outside of Japan gained 2.18 per cent by 7.49am.
US light crude for September delivery rose 80 cents to $70.96 a barrel by 7.50am, having gained 1 per cent yesterday to settle at $70.16, ending a four-day losing streak.
London Brent crude gained 98 cents to $73.87, having earlier risen by $1.01 to $73.90.
“The focus overnight has been on the Fed Reserve's commentary. There is speculation that things are going to start improving from here. There is obviously an oil element.
There are expectations of big drawdowns in those inventories going forward even if they are still increasing now,” said Ben Westmore, commodities analyst at National Australia Bank.
Forecasts that an oil demand recovery is at hand led traders to shrug off bearish weekly stocks data yesterday.
The Energy Information Administation reported a much larger-than-expected rise of 2.5 million barrels in US stockpiles and in distillates stocks, which gained 800,000 barrels and a lower-than forecast 1 million draw in gasoline stocks.
Demand for gasoline and distillates also fell last week, the EIA data showed.
Reuters