Oil rises but still below $72

LONDON (AFP) - Oil prices rallied Tuesday as traders took their cue from the falling dollar after recent sharp losses that came against a background of weak energy demand and eurozone debt concerns. The market also found support from the prospect of another fierce snowstorm in the United States northeastern region, which would boost heating fuel demand.
New Yorks main futures contract, light sweet crude for delivery in March, jumped 1.60 dollars to 73.49 dollars a barrel. Londons Brent North Sea crude for March also added 1.60 dollars to 71.71 dollars.
Today, market participants will be watching for the US dollar movements as well as global equity markets for further signs of US economic conditions, said Sucden analyst Myrto Sokou.
The euro jumped back above 1.38 dollars on Tuesday on intense speculation the EU will help Greece resolve its fiscal crisis after many players had bet against the currency in recent weeks, dealers said.
They said news that European Central Bank president Jean-Claude Trichet was leaving a central bankers meeting in Sydney early to attend a European Union summit in Brussels on Thursday bolstered belief that a deal was in the works.
A weaker US currency tends to boost dollar-priced oil because the commodity becomes cheaper for buyers using stronger currencies.
In London afternoon trade, the euro was up sharply at 1.3807 dollars from 1.3648 dollars late in New York on Monday. Last Friday, the euro had slumped to 1.3586 dollars, the lowest level since May 20, 2009, as financial markets were rattled by eurozone debt fears.
Oil prices recovered slightly on Monday after a massive sell-down last week that was triggered by weak US jobs data and the debt problems in Europe.
Reports that the debt and deficit problems of Greece, Spain and Portugal all of which belong to the 16-nation eurozone will be high on the agenda at a key EU meeting on Thursday helped to support financial markets.
Elsewhere, the mid-Atlantic region of the United States braced for a new winter storm this week after digging out from a weekend blizzard.
So far, oil market fundamentals have been on a gradually improving trendline and the recent bout of cold weather is likely to speed up that process of correction further, Barclays Capital analysts said in a note. The advent of the powerful storm across the US mid-Atlantic over the weekend has provided some support to prices.
At Sucden, Soukou said that traders will switch their attention on Wednesday to reports from the US governments Energy Information Administration (EIA) and the Organization of Petroleum Exporting Countries (OPEC).
Tomorrow, the main focus will switch to the monthly reports from the EIA and OPEC that could provide further signs on the recovery of demand for energy products.