Oil up to $75 as stocks rise, Europe worries ease

NEW YORK -- Oil prices followed stocks higher on Wednesday, as worries about European debt problems eased and buyers returned to the market.

Benchmark crude for October delivery rose 91 cents to $75 a barrel on the New York Mercantile Exchange. The contract fell 51 cents to settle at $74.09 on Tuesday.

At the pump, gasoline prices inched down to a national average of $2.68 a gallon, according to AAA, Wright Express and Oil Price Information Service. That's about the same as a week ago and 10.2 cents above a year ago.

Shares of oil and gas companies climbed after Fitch raised its rating on BP. The troubled energy giant issued a report Wednesday taking blame for the big spill in the Gulf of Mexico, while saying other companies involved in the Deepwater Horizon disaster shared some blame. BP shares rose more than 3 percent in midday trading. The AMEX Oil Index, which tracks a dozen major oil and gas companies, gained 1.4 percent. The Dow Jones Industrial Average added more than 75 points, with the S&P 500 and the NASDAQ higher as well.

Oil traders often look to stocks as a barometer of overall investor sentiment.

Worries about the European economy that brought down stocks on Tuesday faded. "A successful bond auction in Portugal ... lessened concerns over eurozone sovereign debt," Tradition Energy Senior Director of Market Research Addison Armstrong said in a note to investors.

Still, concerns about record high levels of oil inventories continue to undermine significant gains in energy prices.

"There is a consensus emerging that economic growth is not going to be strong enough to eat into the existing surpluses," energy consultants Cameron Hanover said. "We have had too many negative economic data points released over the last few weeks for us to build a convincing argument that the economy is recovering strongly."

The Energy Department's weekly report on crude oil inventories comes out a day later this week, on Thursday, because of the Labor Day holiday. Analysts surveyed by Platts, the energy information arm of McGraw-Hill Cos., expect oil supplies to fall by 730,000 barrels and gasoline to drop by 820,000 barrels.

The government also releases natural gas inventories on Thursday. Analysts expect them to expand by 56 billion to 60 billion cubic feet.

In other Nymex trading in October contracts, heating oil rose 1.76 cents to $2.0919 a gallon and gasoline gained 1.78 cents at $1.9507 a gallon. Natural gas for October delivery picked up 0.7 cent at $3.859 per 1,000 cubic feet.

In London, Brent crude rose 68 cents to $78.42 on the ICE Futures exchange.