* U.S. forecasts active 2010 hurricane season
* Coming Up: US consumption for April; 1230 GMT
By Alejandro Barbajosa
SINGAPORE, May 28 (Reuters) - Oil extended gains to touch a
two-week high above $75 on Friday, heading for the first weekly
gain in almost a month, aided by rallying stock markets and
expectations of rising U.S. consumption as vacationers take to
the roads.
Prices posted their biggest two-day gain since mid-August
over the past two days following data that showed an increase
in fuel demand in the world's top consumer, the United States,
and China's assurance that Europe remains a key investment
market for its foreign-exchange reserves.
U.S. crude for July delivery <CLc1> rose 86 cents to $75.41
a barrel at 0203 GMT, reasserting a premium over ICE Brent
<LCOc1>, which climbed 58 cents to $75.24. Prices were up 7
percent so far this week.
Prices dropped to $67.15 just three days ago, the lowest
level since September, excluding a May 20 trough below $65 as
the June contract expired.
"Given where we are in the cycle of the demand for crude,
we are at the beginning of a recovery in the price," said
Jonathan Barratt, managing director at Commodity Broking
Services in Sydney.
"I feel that given the velocity of the move, the market
will look to buy crude. Dips will be well supported at $72."
Oil prices were also being supported by a rally in stock
markets. Exporters led the Nikkei up 1.8 percent on Friday,
following a Wall Street rally the previous day on China's
reassurance that Europe remains a key investment market.
Traders also focused on forecasts for an intense Atlantic
hurricane season, which revived concern of disruption to
supplies in the Gulf of Mexico, where BP's attempt to plug a
gushing oil well was proceeding to plan.
In its first outlook for the hurricane season that begins
in June, the U.S. National Oceanic and Atmospheric
Administration forecast 14 to 23 named storms, with eight to 14
turning into hurricanes, nearly matching 2005's record of 15.
[]
Hurricanes Katrina and Rita devastated offshore oil fields
and refineries across Louisiana and Texas in 2005, causing the
most severe disruption to U.S. supplies related to a natural
disaster.
DRIVING SEASON KICKS OFF
The U.S. driving season, when motor fuel demand reaches its
annual peak, starts this weekend with the U.S. Memorial Day
holiday, running until Labour Day in early September.
"From the fundamental point of view, it's gasoline demand
and forecasts that the hurricane season may be more active than
expected" that are boosting prices, Barratt said.
U.S. diesel demand for trucking and industry is also
rising, a weekly government report showed on Wednesday.
Oil demand in the U.S. climbed almost 7 percent over the
past four weeks, the Energy Information Administration said,
led by a 16 percent jump in demand for distillates, a category
that includes diesel and heating oil.
The U.S. economy grew at a slightly slower pace than
previously estimated in the first quarter but the recovery
still appeared solid, suggesting the economy could withstand
fallout from the European debt crisis. []
China's central bank on Thursday said a Financial Times
report on Wednesday that Beijing was concerned about its
euro-zone bond holdings was groundless. []
Industry data provider Genscape on Thursday said crude
inventories at the U.S. pricing point of Cushing, Oklahoma hit
another record high in the week to May 25, rising 478,000
barrels to 39.9 million barrels, from a week earlier.
[]
(Editing by Himani Sarkar)
