Oil higher on bargain-hunting

Singapore - Oil rose in Asian trade on Friday following sharp losses overnight as investors attracted by cheaper prices returned to the market, analysts said.

Sentiment, however, remained weighed down by tumbling stock markets and a stronger US dollar which makes oil more expensive.

New York's main contract, light sweet crude for March delivery, turned higher in afternoon trade, rising 27c to $73.41 a barrel.

The benchmark contract had plunged nearly four dollars in New York trade on Thursday following a surprise rise in US initial weekly jobless claims and a European debt crisis.

Brent North Sea crude for March delivery was up 13c to $72.26 after dropping $3.79 in London overnight.

"After the big selloff on Thursday some investors see this as a potential buy opportunity," said Victor Shum, a Singapore-based analyst with global energy consultancy Purvin and Gerz.

He said any gains will be limited by the overall gloom generated by falling stock markets and jitters sparked by Greece's plans to rein in its public deficit which has pushed the eurozone into its worst-ever crisis.

"Asian stock markets are bleeding and the US dollar has gained strength against the euro and the Japanese yen," said Shum.

Because oil is traded in US dollars, a stronger US currency makes the commodity more expensive to buy for holders of weaker currencies, leading to weaker demand.

"The volatility of the market in response to this financial news is going to continue," Shum said.

- AFP