Oil hovers above $75 as Asian stocks rally

An oil pump works in front of a natural gas burn-off in the desert oil fields of Sakhir, Bahrain. Oil prices hovered above $75 a barrel on Monday in Asia. File photo

Oil prices hovered above $75 a barrel Monday in Asia, buoyed by rallying global stock markets and improving investor sentiment.

Benchmark crude for October delivery was up 1 cent at $75.18 a barrel at mid-day Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.81 to settle at $75.17 on Friday.

Federal Reserve Chairman Ben Bernanke said Friday the central bank was ready to step in if the U.S. economy showed further signs of weakening. Bernanke’s comments sparked a stock market rally, with the Dow Jones industrial average jumping 1.7 percent Friday.

All major Asia stock markets followed the U.S. lead and rose Monday. They also got a boost from Japan’s central bank deciding at an emergency board meeting to further ease monetary policy by extending more cheap loans to financial institutions.

Oil traders often closely watch equities as a gauge of overall investor sentiment.

“Markets got the clarity they wanted,” DBS bank said in a report. “The Fed will cut if it needs to.”

Oil prices have bobbed near $75 for most of the past year as the global economy recovered from last year’s recession, but developed countries struggle to regain strong growth.

In other Nymex trading in September contracts, heating oil was steady at $2.045 a gallon and gasoline added 0.98 cent to $1.958 a gallon. Natural gas for October delivery rose 4.3 cents to $3.748 per 1,000 cubic feet.

Brent crude was unchanged at $76.65 a barrel on the ICE futures exchange.