Oil above $77 on weaker dollar and firm equities

Tensions between the US and Iran may continue to support prices. (AFP)

Oil rose towards $78 a barrel yesterday, supported by a weaker dollar and gains in stock markets on renewed investor risk appetite as concerns about a euro zone debt crisis subsided.

US crude for March delivery rose 43 cents to $77.44 a barrel after closing 3.9 percent higher on Tuesday, the highest percentage gain since a 5.8 percent rise on September 30.

London Brent crude for April climbed 39 cents to $76.07 a barrel.

The euro held near a one-week high against the dollar on a return of risk appetite as global share markets and commodity prices extended gains, although traders were prepared to dump risky assets should more news about Greece's debt woes emerge.

"It is very clear that the fundamentals are not driving this market, but more the bigger economic exchange rate story," said analyst David Wech at JBC Energy in Vienna. Weakness in the US dollar typically supports oil prices by encouraging investor interest in dollar-denominated commodities.

Crude inventories in the United States were expected to have risen by 1.9 million barrels in the week ended on February 12, as imports that had been delayed by weather along the Gulf Coast came ashore, an initial Reuters poll found.

Distillate stocks, which include heating oil and diesel, fell 1.6 million barrels, with demand for heating fuel seen higher after two heavy snowstorms hit the US East Coast, while gasoline supplies increased 1.6 million barrels, the poll showed.

Tensions between the US and Iran may continue to support prices. President Mahmoud Ahmadinejad said any country that tried to impose new sanctions on Iran would regret its actions, as the US and Russia voiced concerns about Tehran's nuclear programme.

 

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