Oil hovers below $74 as Asian stocks gain

Oil prices hovered below $74 a barrel Thursday in Asia, consolidating a big gain the day before as an Asian and U.S. stock market rally buoyed investor confidence.

Benchmark crude for October delivery was down 4 cents to $73.87 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $1.99 to close at $73.91 on Wednesday.

Most major Asian stock markets rose Thursday, extending gains from the U.S. where the Dow Jones industrial average jumped 2.5 percent. Investors took heart from encouraging manufacturing numbers from the U.S. and China, signs the global economy may not slow in the second half as much as previous anticipated.

Oil traders brushed off another big rise in crude inventories last week reported by the Energy Department on Wednesday. Some analysts say the increase in inventories reflects overproduction by U.S. refineries rather than weak demand.

"U.S. oil demand is growing at a healthy pace and incoming data is consistent with a picture of steady recovery," Barclays Capital said in a report. "The seasonal increase in U.S. refinery activity has proved to be much larger than usual."

In other Nymex trading in October contracts, heating oil fell 0.61 cents to $2.035 a gallon and gasoline dropped 0.72 cent to $1.882 a gallon. Natural gas for October delivery fell 1.1 cents to $3.751 per 1,000 cubic feet.

Brent crude was down 54 cents at $75.81 a barrel on the ICE futures exchange.