* U.S. economic growth slows, but not as sharply as feared
* Bernanke says Fed ready to act to stop recovery stall
* Coming up: Fed Reserve FOMC minutes released on Tuesday
(Recasts, updates prices, market activity to settlement and
later post-settlement trade)
By Robert Gibbons
NEW YORK, Aug 27 (Reuters) - U.S. oil prices rose a third
straight day on Friday, rallying with equities as investors
shrugged off revised lower second quarter growth data and
cautionary remarks by the Federal Reserve chief.
Sources also pointed to short covering ahead of the weekend
with three tropical systems churning in the Atlantic Ocean also
helping lift crude oil futures that had dropped to an 11-week
low under $71 a barrel intraday on Wednesday.
U.S. crude for October delivery <CLc1> rose $1.81, or 2.47
percent, to settle at $75.17 a barrel. It traded as low as
$72.04 and reached a $75.54 peak in post-settlement trading.
Volume was heavy, with more than 900,000 lots traded with
an hour left in post-settlement trading, up sharply from
Thursday's 784,091 lots traded and well above the 30-day
average of 585,267.
Front-month crude prices finished $1.71, or 2.33 percent,
higher for the week, breaking a string of two straight down
weeks. The oil market was consolidating a recovery from
Wednesday's $70.76 intraday low, which was weakest front-month
price since the $70.75 low struck on June 8.
On Friday October Brent crude <LCOc1> rose $1.02 to $76.04
a barrel.
Federal Reserve Chairman Ben Bernanke said the U.S.
recovery has softened more than expected. His remarks came
after the U.S. Commerce Department revised its second-quarter
growth estimate downward, although by less than analysts had
expected. [] []
"The advance developed mainly in response to a strong
equity rally that was, in turn, influenced by a friendly
response to Fed Chairman Bernanke's remarks and a better than
expected GDP revision," Jim Ritterbusch, president at
Ritterbusch & Associates in Galena, Illinois.
Bernanke said the Federal Reserve was ready to take further
steps if needed to fuel a stalled economy and analysts said
that would be supportive for riskier assets such as equities
and oil.
"You need to distinguish how the market reacts on the
release of the news versus more favorable prospects for risk
appetite with another round of quantitative easing," said Harry
Tchilinguirian, oil analyst at BNP Paribas.
U.S. stocks ended higher as buyers stepped in after major
indices fell sharply after Bernanke's comments and a warning by
technology bellwether Intel Corp <INTC.O> pushed the S&P 500
index down to 1,040, a key technical level that has
consistently brought in buyers in the past year. []
The U.S. dollar rose against the yen and the Swiss franc,
but the dollar index <.DXY> was weaker and the greenback was
lower versus the euro <EUR=>, also in volatile trading.
A weaker dollar can support oil prices because it makes
dollar-denominated oil less expensive to countries using other
currencies and lowers the value of the currency being paid
producers.
Ahead of Wednesday's 11-week low, money managers had cut
net long crude oil positions on the New York Mercantile
Exchange in the week to Tuesday, the Commodity Futures Trading
Commission said on Friday. []
Bulging U.S. oil inventories have kept U.S. benchmark West
Texas Intermediate crude prices lower than North Sea Brent.
The premium of front-month Brent futures over front-month
WTI jumped over $2.00 intraday on Friday for the first time
since May, when U.S. crude prices fell to a 2010 low below $65
a barrel. []
On Friday October Brent crude <LCOc1> rose $1.63 to settle
at $76.65 a barrel.
STORMY WEATHER
Oil markets were eyeing a string of tempests in the
Atlantic, putting some storm premium into the market, sources
said, though on Friday the storms were not expected to threaten
to the energy infrastructure in the Gulf of Mexico.
The U.S. National Hurricane Center was monitoring three
tropical systems, including Hurricane Danielle and Tropical
Storm Earl, though computer models were showing all three
steering away from the Gulf of Mexico. []
(Additional reporting by Gene Ramos in New York, Joe Brock in
London, Alejandro Barbajosa in Singapore; Editing by David
Gregorio)
