World oil prices rose Tuesday in line with rebounding stock markets and as Hurricane Bill picked up strength in the Atlantic Ocean, albeit far from US oil rigs in the Gulf of Mexico.

New York’s main futures contract, light sweet crude for delivery in September, gained 66 cents to $71.20 per barrel.

“Oil prices are higher as equity markets bounced back and after Hurricane Bill, the first hurricane of the 2009 season, quickly grew into a Category 2 hurricane,” said Sucden analyst Nimit Khamar.

“Hurricane Bill is headed for Bermuda and the eastern US coast, so is not threatening to the oil and gas installations in the Gulf of Mexico and would unlikely be the cause of higher prices - especially given energy stocks are ample.”

Global stock markets rebounded somewhat Tuesday, with investors pausing for breath after a fierce sell-off the previous day that was sparked by jitters over the global economic outlook.

Markets absorbed news that German investor confidence rose in August, according to a ZEW survey, less than a week after data showed Europe’s biggest economy emerging from recession sooner than expected.

In early afternoon deals, the London stock market added 0.77 percent, Paris won 0.59 percent and Frankfurt climbed 0.63 percent.

Asian equities also clawed back some of their recent losses. Tokyo gained 0.16 percent and Hong Kong finished 0.84 percent higher.

Hurricane Bill - the first of the Atlantic storm season - reached Category 2 strength late Monday, with top winds whizzing at about 100 miles (160 kilometers) per hour, US forecasters said.

At 03:00 GMT Tuesday, the hurricane was located 865 miles (1,395 km) east of the Lesser Antilles, churning west-northwestward toward the US mainland at 17 miles (28 kilometers) an hour, the National Hurricane Center said.

“Additional strengthening is forecast during the next 48 hours,” the Miami-based center said, potentially making Bill “a major hurricane” by Wednesday.

Crude prices had slumped Monday, extending heavy pre-weekend losses and mirroring tumbling stock markets, amid concerns that US economic recovery would take longer than expected.

Oil markets “sold off quite heavily in the past few days,” said Ben Westmore, a minerals and energy economist with the National Australia Bank.

“There is so much uncertainty and people are unsure of the outlook,” he said.

The oil market largely ignored a rebound Monday in a key US manufacturing survey which showed improvement in an index measuring general business conditions.

In July last year, oil prices hit record peaks above $147 a barrel before collapsing due to weak energy demand arising from the effects of the world financial crisis, striking $32 a barrel in December.

Source: AFP