Oil prices rally on upbeat US data

Oil prices rallied this afternoon after the German parliament approved a bill to extend the European bailout fund, while today’s US data beat expectations, calming fears that the US economy is headed for a double-dip recession, which would reduce energy demand and sampan oil price.

Analysts projected today’s employment report from the US Labor Department o show a decline in initial jobless claims, but the actual report revealed a bigger than anticipated drop of 37,000 to 391,000, a sign that the job market recovery in the US is picking up.

Prior to that, the Commerce Department revised its growth estimate for the US second quarter GDP from 0.3 percent to 1.3 percent.

Meanwhile, today’s crucial vote on expanding Europe’s rescue fund in the German parliament was successful, inspiring confidence that Europe has its fiscal problems under control.

Investors are now waiting for EU policymakers to agree on a plan to minimize the fallout from the Greek debt nightmare and prevent the debt crisis from spreading into other euro zone countries.

Gains in oil prices were curbed by yesterday’s inventories data. The US Department of Energy said that US crude stockpiles added 1.9 million barrels last week, suggesting a decline in energy demand in the US.

Gasoline inventories also increased, adding 791,000 barrels.