Oil prices hover above $75 a barrel in Asia on hopes of continued economic recovery

Oil prices hover near $75 amid rising demand signs

Oil prices swung around $75 a barrel Friday as signs of rising demand in the U.S. fueled hopes of continued economic recovery but a stronger dollar made crude more expensive for foreign investors.

By early afternoon in Europe, benchmark crude for July delivery was down 37 cents at $74.24 a barrel in electronic trading on the New York Mercantile Exchange. Earlier in the session, it climbed as high as $75.42. The contract rose $1.75 to settle at $74.61 on Thursday.

Prices have been rising recently after falling from $87 a month ago amid improving demand for crude products in the U.S. and news that the federal government will stop all new drilling in the Gulf of Mexico following the worst crude spill in American history.

“Oil is in a recovery mode,” said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore. “The indication this summer driving season is that demand is picking up in the U.S. I see a gradual creeping up of oil prices to the high $70s as we go deeper into summer.”

However, concerns over Europe’s debt problems and slowing growth in China may put a lid on gains, Shum said, while a stronger dollar was also limiting oil prices by making crude more expensive for investors holding other currencies.

The euro fell to $1.2107 on Friday from $1.2182 late Thursday in New York.

Also expected to provide further support for the market’s positive mood is the release later Friday of U.S. unemployment data.

Experts expect the world’s largest economy to have added a net total of 513,000 jobs in May. That would be the biggest increase since September 1983 and would cut the unemployment rate to 9.8 percent from 9.9 percent.

“Given the impressive expansion we have seen in the U.S. economy over the last few weeks, we would not be surprised to see the number exceed estimates, in which case the crude and equity rallies will likely gain further upside traction,” said senior commodity analyst Edward Meir of MF Global in New York.

The moratorium on new drilling could slow oil production in the Gulf and boost oil prices. An e-mail obtained by The Associated Press from the Gulf Coast office of the Minerals Management Service said that “until further notice” no new drilling will be allowed in the Gulf, at any water depth.

So far between 21 million gallons (80 million liters) and 46 million gallons (175 million liters) of oil has spewed into the Gulf from the 6-week-old spill, according to government estimates.

The moratorium comes as the Energy Information Administration reported that stocks of crude oil shrank by 1.9 million barrels last week and gasoline inventories fell by 2.6 million barrels. Demand for crude products over the last four-week period is 8.1 percent higher than a year ago, including a 17.1 percent increase in distillates such as diesel fuel and heating oil.

Still, supplies continue to be ample.

“A stock draw is naturally more positive than a stock build but the overall stock base remains well above recent historical levels,” said Olivier Jakob of Petromatrix in Switzerland.

In other Nymex trading in July contracts, heating oil rose 0.34 cent to $2.0425 a gallon and gasoline gained 0.27 cent to $2.0839 a gallon. Natural gas was down 0.5 cent at $4.685 per 1,000 cubic feet.

In London, Brent crude was up 2 cents at $75.43 a barrel on the ICE Futures exchange.

Associated Press writer Eileen Ng in Kuala Lumpur, Malaysia, contributed to this report.