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Oil hovers below $89 in Asia as global equities rally, China manufacturing boost optimism
SINGAPORE (AP) ' Oil prices hovered below $89 a barrel Thursday in Asia amid a global stock market rally that has boosted crude trader optimism the U.S. may avoid a recession.
Benchmark oil for October delivery was up 12 cents to $88.93 at mid-afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude fell 9 cents to settle at $88.81 on Wednesday.
In London, Brent crude for October delivery was up 10 cents at $114.95 on the ICE Futures exchange.
Crude has risen 17 percent from August 9 amid a growing consensus that the U.S. economy will see weak growth, but not contract, in the second half.
Oil traders often look to equities as a barometer of overall investor sentiment, and the Dow Jones industrial average has risen four consecutive days.
Asian stock markets gained Thursday after China said manufacturing increased in August. HSBC's purchasing managers' index rose for the first time in three months while a survey by an industry group also showed activity expanded slightly.
"Despite the weak signs of recovery here in the U.S., oil supply remains tight globally," energy traders and consultant Blue Ocean Brokerage said in a report.
Some analysts are concerned a struggling U.S. economy will undermine crude demand.
Crude supplies increased by 5.3 million barrels last week, the Energy Department's Energy Information Administration said in its weekly report. Analysts expected oil supplies to decline by 1.2 million barrels, according to Platts, the energy information arm of McGraw-Hill Cos.
"A continued highly vulnerable macroeconomic environment still leaves open the possibility of a sharp and fast price plunge capable of negating the recent price upswing in matter of a couple of sessions," Ritterbusch and Associates said in a report.
In other Nymex trading for October contracts, heating oil added 0.2 cent to $3.09 per gallon and gasoline futures was steady at $2.88 per gallon. Natural gas for October delivery held at $4.06 per 1,000 cubic feet.