Oil rose more than $3 today, rebounding from a 15-month low below $70 on a late rally on Wall Street and growing expectations of an OPEC production cut.
US equities, the oil market's leading barometer of global economic health, staged a late surge yesterday as investors snapped up battered shares a day before stock options expired.
The Dow Jones industrial average jumped 4.68 per cent while the broader Standard & Poor's 500 Index climbed 4.24 per cent.
US crude for November delivery rose $3.12 to $72.97 a barrel by 0519 GMT, after settling $4.69 lower at $69.85, before the close of trade on Wall Street.
London Brent crude gained $2.46 to $70.30.
Analysts said oil traders were also betting the Organisation of the Petroleum Exporting Countries (OPEC) would reduce supply to support prices when it meets next week.
The 13-member cartel said yesterday it had brought forward to Friday next week an emergency meeting to discuss the impact of global recession on oil markets.
Oil prices have fallen more than 50 per cent from their peak above $147 a barrel hit in July, on demand worries amid the global economic downturn.
Qatar's Oil minister Abdullah al-Attiyah said he expected OPEC to cut oil production by one million barrels per day (bpd) or more at the meeting.
Nigerian Oil Minister Odein Ajumogobia said the meeting was an opportunity to consider options regarding the world oil price but that no course of action had yet been proposed.
Longer term, analysts said softening demand and the economy were still the focus, with many of them have scaled back their global oil demand growth estimates after a recent slew of grim economic data.
Crude oil inventories in the United States rose 5.6 million barrels last week, far exceeding analysts' expectation of a 1.9-million-barrel increase, as demand in the world's top consumer continued to fall, the US Energy Information Administration reported.
Gasoline inventories rose 7.0 million barrels, more than double analysts' forecast of a 2.9-million-barrel increase, as overall product demand over the past four weeks dropped 8.9 per cent from year ago levels.
Hurricane Omar weakened to a tropical storm in the Atlantic yesterday after threading its way through the small islands of the northeastern Caribbean, causing relatively little damage and posing no threat to the United States or any other land area, the US National Hurricane Center said.
Reuters