LONDON, Oct 8 – Oil prices rebounded on Thursday as stock markets rallied on economic recovery hopes after US aluminium giant Alcoa\’s surprisingly swung into profit, traders said.
New York\’s main contract, light sweet crude for delivery in November climbed 72 cents to 70.29 dollars a barrel.
In London, Brent North Sea crude for November gained 74 cents to 67.94 dollars.
Alcoa\’s report is "very positive and this really marks a strong start for the third quarter corporate earnings season," said Victor Shum of energy consultancy Purvin and Gertz.
"This sparked the stock markets… to turn up and oil has gained along with them," he added.
Alcoa announced in the United States late on Wednesday that it had swung into profit in the three months to September 30 after three quarters running of losses.
The company said its net income was 77 million dollars or eight cents a share in the quarter ended September, compared with a net loss for the second quarter of 454 million dollars or 47 cents per share.
Alcoa was the first company in the blue chip Dow Jones Industrial Average index to announce results for the third quarter. It had been expected to report a loss excluding special items of nine cents a share.
European and Asian stock markets rallied on Thursday on the news.
Oil market traders meanwhile also digested news that the main armed group in southern Nigeria said on Wednesday that it would resume attacks on the oil industry when its ceasefire expires on October 15.
The Movement for the Emancipation of the Niger Delta (MEND) dismissed a government amnesty programme as a "charade" and warned it would no longer limit its attacks on pipelines.
Oil prices have also won support this week on a report that Gulf states considered dropping the greenback for oil transactions.
Britain\’s Independent newspaper on Tuesday reported that Gulf countries had held secret meetings with officials outside the region to discuss dropping the dollar for oil trade.
The countries would instead use a basket of currencies, including the yen, the paper said, citing Gulf Arab and Chinese banking sources in Hong Kong.
The report faced a series of denials by countries cited in the report, including France which described it as "pure speculation."
The Independent had reported that Gulf states, together with China, Russia, Japan and France, were considering replacing the dollar.
Demand for oil has plunged amid the world economic downturn, the most severe since the 1930s. Oil prices tumbled from historic highs of more than 147 dollars in July 2008 to about 32 dollars in December because of global recession.
Prices have since recovered but investors remain concerned over the pace of the upturn.