Oil near $74 in Asia on renewed US growth optimism

Oil prices rebounded to near $74 a barrel Thursday in Asia amid renewed growth optimism after the Fed said the world's biggest economy was improving and President Barack Obama vowed to boost jobs.

Benchmark crude for March delivery rose 32 cents to $73.99 a barrel at early afternoon Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract fell $1.04 to settle at $73.67 on Wednesday, the lowest since Dec. 14 when crude dipped to $73.46.

Obama, fighting to recharge his embattled presidency, pledged Wednesday in his first State of the Union address to get millions of Americans back to work even as he tackles the soaring U.S. deficit.

He also prodded Congress to enact a second stimulus package to help small businesses and funding for infrastructure projects, after bailing out big banks in the past.

The Federal Reserve also promised Wednesday to hold interest rates at near zero to nurture the economic recovery and reduce unemployment. It also said American economic activity "continued to strengthen," a modest upgrade from its previous take on the economy.

The news cheered Wall Street which ended higher Wednesday. Asian stock markets are also up Thursday, helping oil prices to reverse their slide.

Oil fell the previous day, dampened by an Energy Information Administration report that demand for crude products had dropped even further from the weak levels of a year ago when the recession's grip on the economy was strongest.

The EIA report showed demand for gasoline fell 0.8 percent over the four weeks ended Friday compared with a year earlier and that demand for distillates used for heating oil and diesel fuel was off 8.1 percent.

Oil prices are about double what they were a year ago and hit a 15-month high earlier this month even though consumption has been awful. Valero, the biggest U.S. refiner, reported Wednesday that it lost almost $2 billion in 2009 as it struggled to pass on higher oil prices to consumers.

In other Nymex trading in February contracts, heating oil rose 0.88 cent to $1.9256 a gallon, while gasoline dropped 0.37 cent to $1.9355 a gallon.

In London, Brent crude for March delivery rose 25 cents to $72.49 a barrel on the ICE Futures exchange.