Oil climbs on Asian stocks, US demand

27 May 2010

Written by Neil Brunskill

Crude oil prices rose on the New York Mercantile Exchange this morning (May 27th), supported by a rebound in Asian stocks and strengthening fuel demand in the US.

After slipping to $69 a barrel earlier this week, the headline crude oil contract was trading above $72 this morning as the Japanese Nikkei stock index rebounded from a six-month low.

Speaking to Reuters, Ben Westmore, a commodities analyst at National Australia Bank, commented: "Oil will largely follow equity markets. They are probably the foremost gauge about where confidence is at the moment."

Crude and heating oil prices also found support from the American Petroleum Institute and the Energy Information Administration, both of which recorded a drop in fuel inventories last week.

A drawdown in diesel has been instrumental in boosting confidence in fuel demand, as the product is the main transport fuel for heavy industry in the US.

Meanwhile, a shortfall in gasoline stocks also pointed to stronger demand as the US driving season gets underway.