Oil continued its rally towards $90 (Dh328.5) a barrel on Friday, as lawmakers in the United States confirmed an economic stimulus plan that helped quell fears of a recession in the world's top energy consumer.
US crude rose 29 cents to $89.70 (Dh327.40) a barrel by 0105 GMT, after jumping nearly 3 per cent in the previous session to $89.41 (Dh326.35) a barrel.
On Thursday, congressional leaders and the White House confirmed a $150 billion (Dh547.5 billion) stimulus package of tax rebates for families, and incentives for business investment aimed at bolstering the battered economy.
"Last night's price rally is mostly a reaction to the stimulus plan, despite the fundamental news being somewhat bearish," said Takeda Makota, assistant manager at Bansei Securities.
Growing fears that the widespread subprime mortgage crisis could tip the US into a recession and depress oil demand growth have sent prices plunging from peaks above $100 (Dh365) a barrel in early January.
The strong rally in global stock indices gave crude prices a boost, offsetting mildly bearish US inventory data, which showed that domestic crude supplies rose 2.3 million barrels last week, slightly above analyst expectations.
US gasoline stocks swelled by 5 million barrels, well above forecasts, while distillates slipped 1.3 million barrels, the EIA said.
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, contributing to losses earlier in the week.
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.
Iraq's oil minister on Thursday said oil markets were well supplied, adding he did not think the cartel will need to adjust production levels, echoing earlier sentiments by other OPEC members this week.
The Organization of the Petroleum Exporting Countries will meet on February 1 to set production policy. Many analysts believe the cartel will hold back from raising output. (Reuters)
Oil continues rally after US economic stimulus plan