SINGAPOREâ€”Oil edged up above $77 a barrel on Wednesday, supported by the weaker dollar and rally in equities markets, as optimism over the global economy stoked hopes for higher fuel demand.
Asian stock markets, led by Japan and Hong Kong, extended their rise after U.S. shares posted their biggest daily percentage gain in three months on Tuesday, signalling a return of risk appetite among investors.
U.S. crude for March delivery CLc1 rose 26 cents to $77.27 a barrel at 0353 GMT, marked by thin trading volumes, after closing 3.9 per cent higher on Tuesday, the highest percentage gain since the 5.8 per cent rise on September 30.
London ICE Brent for April LCOc1 climbed 22 cents to $75.90 a barrel.
â€œThe market is purely focused on expectations of an economic recovery rather than on inventories,â€ said Jonathan Barratt, managing director of Commodities Broking Services in Sydney. â€œThe inventory build-up will in itself help contain the prices. But people feel that demand will continue to rise.â€
Trade was still muted in most parts of Asia as traders slowly returned from holidays.
â€œI expect things to really pick up when China returns from their holiday. As a result, people are starting to pre-empt that,â€ Barratt said.
â€œI wouldnâ€™t be surprised that oil will be at $80 a barrel by the weekend.â€
Crude oil inventories in U.S. were expected to have risen by 1.9 million barrels in the week ended February 12, as imports that had been delayed by weather along the Gulf Coast came ashore.