* Oil recovers from earlier slide as equities rise
* Crude prices down 17 percent since early May
* Coming Up: API inventory data on Tuesday
(Recasts, adds details.)
By Joshua Schneyer
NEW YORK, June 7 (Reuters) - Oil rose on Monday, rallying
back from a fall in earlier trade, as energy investors were
encouraged by firming equities markets following a sharp
sell-off on Friday.
Crude prices turned positive after falling by 3 percent
earlier. Benchmark U.S. crude prices <CLc1> rose 87 cents to
$72.38 a barrel at 1:34 p.m. EDT (1734 GMT).
Prices have declined by around 17 percent since hitting a
19-month high above $87 a barrel in early May.
ICE Brent crude for July <LCOc1> rose 75 cents to $72.84.
The Dow and S&P indexes rose in afternoon trade, as
bargain-hunters returned to equities markets after a sharp
sell-off on Friday, when U.S. equities declined by 3 percent.
[]
Oil industry tracker Baker Hughes said in a release on
Monday that the number of rigs offshore the United States
declined in May to 49, down from 53 in April. Analysts said the
drop could have come after U.S. regulators announced a ban on
Gulf drilling following the Gulf oil spill.
"We've got equities gaining a little strength, the dollar
weakening from its highest levels earlier, and some tentative
buying after Friday's sell off," said Peter Beutel, president
of Cameron Hanover in Connecticut.
"The decline in the rig count is important because people
are starting to realize that the oil spill could bring declines
in (U.S.) production."
Support for oil was seen in the start of the Atlantic
hurricane season this week, which the top U.S. government
weather agency has warned could be the most intense since 2005.
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The U.S. dollar was nearly unchanged against a basket of
foreign currencies. The dollar's earlier gains on Monday had
pressured oil prices. <.DXY> A stronger dollar makes oil
imports more expensive for European buyers and for consumers in
Asia where demand is surging.
Oil prices plunged by 4.2 percent on Friday after U.S.
employment data showed nonfarm payrolls rose less than expected
in May, and as the euro dropped to a new four-year low.
Trading volume for NYMEX benchmark crude was a slim 226,567
contracts as of 1:44 p.m. EDT, showing investors were treading
cautiously in energy markets.
"Buyers are going to be extremely cautious after getting
spanked in the market last week," said Beutel.
Strong German industrial orders helped the euro steady,
with signs that Europe's largest economy is on the path to
durable growth. []
The chief of the International Monetary Fund downplayed on
Monday market fears that Hungary could face a debt crisis like
Greece.
"I see no reason to be ... concerned. They (the Hungarian
government) will do what they have to do," IMF Managing
Director Dominique Strauss-Kahn told reporters after talks with
finance ministers from the 16-country euro zone.
[]
The Hungarian government vowed to cut spending on Monday as
it strove to repair damage from officials' comments last week
about a possible Greece-style debt crisis. []
(Additional reporting by Edward McAllister and Gene Ramos in
New York, David Sheppard in London, Fayen Yong in Perth and
Alejandro Barbajosa in Singapore; Editing by Marguerita Choy)
