Published On: Fri, Jul 17th, 2009

Oil prices rise with Wall Street

U.S. oil prices rose on Thursday, tracking a late-day rebound on Wall Street and bolstered by a report showing strong economic growth in China, the world’s second biggest consumer of energy.

U.S. crude oil rose 48 cents to settle at $62.02 a barrel, while London Brent eased 34 cents to $62.75 a barrel ahead of the August contract’s expiry.

The gains, which added to Wednesday’s rally of more than $2 triggered by a U.S. report showing sliding domestic crude inventories, coincided with an afternoon bounce on Wall Street driven by technology shares.

“Another late rally and coinciding with an S&P 500 rally, although it’s arguable who’s watching whom more closely,” said Tim Evans, analyst at Citi Futures Perspective in New York.

Oil prices have tracked equities closely in recent months as dealers look to stock markets for signs of optimism about the economy that could eventually spell a rebound in energy consumption.

The oil market had gotten some support from news that China experienced surprisingly strong economic growth of 7.9 percent in the second quarter, fueled by state spending and bank lending.

Oil prices remain down nearly $10 since early July amid lingering concerns about global energy demand, which has been contracting for the first time in a quarter century under the weight of the economic recession.

The global slowdown has cut world oil demand by as much as 2.5 million barrels per day, according to the International Energy Agency.

In the United States, data showed new jobless claims fell to their lowest level since January, but the Labor Department noted that an unusual pattern in automotive layoffs had amplified the drop.

Also highlighting the ongoing problems facing the world economy is the looming bankruptcy of CIT Group Inc (CIT.N), a lender to hundreds of thousands of small and mid-sized U.S. businesses, after bailout talks with the U.S. government fell apart.