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Oil above $85 as stock markets regain footing

SINGAPORE (AP) — Oil prices hovered above $85 a barrel Monday in Asia as stock markets regained their footing after wild swings last week amid concerns about a slowing U.S. economy and worsening European debt crisis.

Benchmark oil for September delivery was up 7 cents to $85.45 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. Crude fell 34 cents to settle at $85.38 on Thursday.

In London, Brent crude for October delivery was up 12 cents to $107.88 per barrel on the ICE Futures exchange.

Crude has risen from below $76 last week after falling from $100 last month as investors try to anticipate how much economic growth may slow in the U.S. and Europe in the second half.

Oil was buoyed Monday by a jump in Asian stock markets. Traders often look to equities as a barometer of overall investor sentiment.

“The market has begun to price in a less apocalyptic macroeconomic scenario,” Barclays Capital said in a report.

It expects Brent oil to rise to $130 a barrel over the next 12 months even with potentially slower economic recoveries in the developed countries.

Barclays said it left unchanged its forecast that Brent will average $110 in the third quarter of this year.

Data released Friday about U.S. consumer demand was mixed. Retail sales rose 0.5 percent last month, the best showing since March. However, consumer sentiment hit a 31-year low in August, according to a Thomson Reuters/University of Michigan’s survey.

In other Nymex trading in September contracts, heating oil rose 1.6 cents to $2.92 a gallon and gasoline added 1.2 cents at $2.83 a gallon. Natural gas futures dropped 4.9 cents to $4.01 per 1,000 cubic feet.

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