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LONDON - Oil rose above $US87 a barrel on Thursday after a rebound in world equity markets eased fears of a recession in top energy consumer the United States.
US crude climbed 91 cents to $US87.90 a barrel by 1732 GMT, after settling at a 13-week low of $US86.99 in the previous session. London Brent crude traded up $US1.06 to $US87.68 a barrel.
Investors put money back into equities on Thursday, hoping a rescue plan for ailing bond issuers would stem credit losses. US stocks edged up, extending a steep late-day rally in the previous session that was sparked by optimism about government and central bank plans to boost the economy.
Strength in equity markets helped offset mildly bearish US inventory data, which showed domestic crude supplies rose 2.3 million barrels last week, slightly above analyst expectations.
"The oil markets are moving up with other financial markets. The EIA data was bearish in some parts but in general within the range of expectations," said Tom Knight, trader with Truman Arnold.
"If the Nymex March crude contracts holds technical support at $US86.50, that pretty much reflects the movement in other markets."
US petrol stocks climbed a larger-than-expected 5 million barrels, while distillates slipped 1.3 million barrels, the EIA said.
"The big bearish number was the huge build in petrol," said Phil Flynn, analyst at Alaron trading. "We are seeing some softness in demand, pressuring the market."
Oil has lost more than $US3 this week. Analysts said funds and speculators had been closing out their positions in oil and commodities to cover margin calls and to finance losses in equity markets.
The International Energy Agency's executive director expressed concern about the strength of the world economy and said oil producers could help the situation by pumping more.
On Wednesday, Qatar's oil minister said Opec did not need to boost output when it meets on Feb. 1 to determine production policy, and expressed concerns that demand could take a blow if a recession hit.
- REUTERS
