Oil edges up on equities strength, weak dollar

Mon Aug 6, 2012 2:06pm EDT
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By Robert Gibbons

NEW YORK (Reuters) - Oil prices edged up on Monday in choppy trade, receiving support from U.S. stocks extending their rally and also from a weaker dollar and ongoing turmoil in the Middle East.

Brent and U.S. crude futures recovered from losses attributed to profit taking after Friday's rally on supportive U.S. jobs additions and hopes that Europe can address its debt crisis.

"Equities moved higher and the dollar is a little lower and that may have been enough to stop the early profit taking after Friday's big jump," said Gene McGillian, analyst at Tradition Energy in Stamford, Connecticut.

Expectations for more stimulus measures to support the debt-laden euro zone and the latest pledge by China, the No. 2 oil consuming country, to intensify its fine-tuning of monetary policy to support economic development also helped keep a floor under oil prices.

U.S. stocks hit a three-month high as traders bet that European Central Bank (ECB) plans to lower borrowing costs for Spain and Italy would work, adding to the bullish sentiment after Friday's strong U.S. July jobs additions. .N

Brent September crude rose 31 cents to $109.25 a barrel by 1:56 p.m. EDT (1756 GMT), after falling to $107.90 and then reaching $109.35, nearly an 11-week high and a penny under the intraday peak from May 22.

U.S. September crude was up 48 cents at $91.88 a barrel, having traded from $90.63 to $92.24, just below the $92.30 intraday peak from July 20 and with the 100-day moving average of $93.58 looming above as potential resistance.

Total crude trading volume was tepid, with Brent and U.S. crude turnover lagging the 30-day moving averages.   Continued...

An attendant prepares to refuel a car at a petrol station in Rome January 4, 2012. REUTERS/Max Rossi