Oil hovers near $77 as stocks extend rally

By ALEX KENNEDY Associated Press Writer

SINGAPORE (AP) - Oil prices hovered near $77 a barrel Wednesday in Asia as a rally fueled by a stock market surge and a stronger euro pauses.

Benchmark crude for July delivery was down 30 cents to $76.64 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.82 to settle at $76.94 on Tuesday.

Crude has jumped from $64 last month as investor concerns eased that Europe's debt crisis will derail the global economic recovery and improving crude demand.

Oil traders, who often look to equities as a measure of overall investor confidence, were cheered by this week's rally in stocks. All major Asian markets rose Wednesday, led by a 1.8 percent advance by Japanese stocks. The Dow Jones industrial average soared 2.1 percent Tuesday.

A stronger euro, which makes dollar-based commodities such as oil cheaper to investors with the European currency, also bolstered crude recently. The euro gave up some gains Wednesday, falling to $1.2285 from $1.2321 on Tuesday.

"Clearly, the price of oil is rallying due to a huge upswing in the Dow Jones and a weakening of the dollar index," said Mike Sander of Sander Capital Advisors. "If that trend continues oil could go back above $80."

In other Nymex trading in July contracts, heating oil gained 0.25 cent to $2.0710 a gallon and gasoline dropped 0.46 cent to $2.1169 a gallon. Natural gas was steady at $5.190 per 1,000 cubic feet.

Brent crude was up 69 cents to $76.89 a barrel on the ICE futures exchange.