Oil rises to $76 amid optimism on global economy

Oil prices rose to near $76 a barrel Friday, helped by a weaker dollar and confidence that the global economic recovery remains intact.

By early afternoon in Europe, benchmark crude for August delivery was up 31 cents to $75.75 a barrel in electronic trading on the New York Mercantile Exchange. The contract rose $1.37 to settle at $75.44 on Thursday.

Signs the global economic recovery remains on track eased fears of a new recession and helped boost investor confidence in oil and stocks, which tend to move in the same direction.

The Labor Department said Thursday that initial jobless claims fell last week to the lowest level since early May, and the International Monetary Fund raised its 2010 world growth forecast to 4.6 percent from 4.2 percent.

All major stock markets in Asia and Europe rose Friday after the Dow Jones industrial average gained 1.2 percent Thursday. Oil traders often look to equities as a gauge of overall investor sentiment.

U.S. crude supplies dropped last week, suggesting oil demand could be improving. Crude inventories plunged 5.0 million barrels, the Energy Department's Energy Information Administration said Thursday, more than a drop of 3.5 million barrels forecast in an analyst survey by Platts, the energy information arm of McGraw-Hill Cos.

However, inventories of gasoline and distillates rose, the EIA said.

"Given the strength of the fundamentals, we would state that something in the region of $80 or above is more befitting" the oil price, Barclays Capital said in a report.

A weaker dollar also helped support prices by making crude cheaper for investors holding other currencies.

The euro bought $1.2701, a two-month high, in Friday morning European trade -- up from $1.2681 late Thursday in New York.

"Supported by rising risk appetite and a weaker U.S. dollar, oil prices have passed the key psychological mark of $75 a barrel again," said a report from Commerzbank in Frankfurt.

In other Nymex trading in August contracts, heating oil rose 2 cents to $2.0253 a gallon, gasoline gained 1.38 cents to $2.0649 a gallon and natural gas fell 3.4 cents to $4.365 per 1,000 cubic feet.

In London, Brent crude was up 42 cents to $75.13 a barrel on the ICE Futures exchange.