Oil price rebounds on European news

Oil prices rebounded to about US$77 a barrel yesterday in Asia from last week's 14 per cent sell-off after Europe and the IMF pledged nearly US$1 trillion ($1.38 trillion) to help defend the embattled euro.

Benchmark crude for June delivery was up US$1.74 to US$76.85 in electronic trading on the New York Mercantile Exchange. The June contract fell US$2 to settle at US$75.11 on Friday.

The European Union Commission and International Monetary Fund pledged a €750 billion loan package after the euro plunged last week.

Crude prices are down from an 18-month high of US$87.15 a barrel early last week as the debt crisis battered the euro, which rallied yesterday to US$1.2944 from US$1.2759.

Commodities priced in dollars become less expensive for investors holding euros as the US currency weakens.

"The EU rescue package has calmed financial markets for now," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. "Equities are going up, the dollar is coming down and oil is reacting to that."

Asian stocks rose in early trading Monday after falling most of last week.

"Last week's drop left oil oversold," Shum said. "We expect prices to creep back above $80, possibly this week." In other Nymex trading in June contracts, heating oil rose 3.84c to US$2.118 a gallon, and petrol added 3.46c to US$2.160 a gallon. Natural gas gained 1.4c to US$4.029 per 1000 cubic feet.

In London, Brent crude was up US$1.73 to US$80 on the ICE futures exchange.

- AP