LONDON, Aug 13 – Oil prices rallied on Thursday on increased signs of economic recovery in the United States and Europe which could eventually boost weak energy demand, analysts said.
Brent North Sea crude for delivery in September jumped 1.25 dollars to 74.14 dollars a barrel in midday London trade.
New York\’s main contract, light sweet crude for September, advanced 1.44 dollars to 71.60 dollars a barrel.
"Crude prices have continued to rise after the… Fed report yesterday and after better than expected GDP data showed Germany and France returned to growth in the second quarter, which further fuelled optimism that oil demand will increase," said Nimit Khamar, oil market analyst for Sucden brokers.
Oil prices had risen on Wednesday after the Federal Reserve said economic activity was "levelling out".
The policymaking Federal Open Market Committee (FOMC) maintained ultra-low interest rates, but said it would gradually end a programme of Treasury bond purchases after completing a 300-billion-dollar scheme in October.
The US economy is the world\’s largest energy consumer and an economic recovery is seen as key to boosting global oil demand after the recession.
On Thursday meanwhile, official data showed that the economy of the 16 nations using the euro contracted by just 0.1 percent in the second quarter, as heavy hitters Germany and France unexpectedly emerged from recession.
However latest government data on US energy reserves showed oil demand remained weak. The US Department of Energy on Wednesday said crude inventories rose by 2.5 million barrels to 352 million barrels in the week ended August 7, more than triple the amount expected by analysts.
It was the third week running of higher crude stockpiles.
On Wednesday, the International Energy Agency gave a cool assessment of so-called "green shoots" of economic growth, saying that oil demand was lagging behind inconclusive signs of global recovery from the economic crisis.
Demand this year would be far weaker than last year, and an unexpectedly weak rally next year would fall far short of compensating for this, said the IEA.
The broad findings of the IEA report chimed with the overall assessment of the Organization of Petroleum Exporting Countries which reported Tuesday that world oil demand would decline slightly this year but begin to grow in 2010.