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Oil prices turned higher in Asian trade Thursday on bargain-hunting and helped by a fall in the dollar, but analysts said sentiment suffered from slower US energy demand and weaker stocks markets.

Analysts said it was unlikely oil prices would break out of the psychological 80-dollar level in the near term as the global economic recovery still faces several challenges.

In addition, oil consuming and producing nations appear comfortable with the current range of 70-80 dollars a barrel, they said.

New York's main contract, light sweet crude for September delivery, was up 20 cents at 77.19 dollars a barrel in afternoon trade.

London's Brent North Sea crude for September rose 12 cents to 76.18 dollars.

Analysts said the weaker dollar spurred some buying because oil is traded in the US currency, making the commodity cheaper for holders of stronger units.

The dollar lost ground in Asian trade Thursday after a warning from the US Federal Reserve that the world's top economy was slowing in some areas, confirming the view that recovery is stalling.

Asian stock markets also fell Thursday on concerns about the US economic recovery.

Ken Hasegawa, energy desk manager at Newedge brokerage in Tokyo, said oil prices were likely to trade within range in the near term.

"We need a very strong recovery worldwide in order to see a sharp rise in oil prices," he told AFP.

Reports of a sharp and unexpected jump in US crude stockpiles further weighed on the oil market, which was already suffering from the effects of weaker American consumer confidence.

The US Department of Energy said crude oil inventories had jumped 7.3 million barrels last week. Analysts had expected a drop of 1.4 million barrels.

Gasoline stockpiles rose by 100,000 barrels, below analysts' predictions of a build of 500,000 barrels, and distillates, which include heating oil and diesel, rose by 900,000 barrels.

Rising stockpiles indicate softer demand. As a top energy consuming nation, US consumption patterns are a key influence on the oil market.

Story from AFP
AFP 07/29/2010 07:51

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