Monday August 31, 09:20 AM

Oil tops $73 on positive econ data, weak U.S. dollar

By Fayen Wong

PERTH (Reuters) - Oil rose above $73 a barrel on Monday and is on track to gain over 5 percent this month, amid optimism energy demand will soon recover on the back of a economic recovery, with the latest data from Japan adding to the ebullience.

Oil prices slipped 1.56 percent last week but are enroute to chalk up gains of 5.2 percent this month, as a raft of upbeat economic data across the globe helped offset figures showing high levels of U.S. oil inventories.

U.S. crude for October delivery rose 39 cents to $73.13 a barrel by 0029 GMT. The contract rose 25 cents to settle at $72.74 a barrel on Friday.

London Brent crude edged up 11 cents to $72.90.

"Economic optimism is helping to lift oil prices, with Japan's industrial output numbers further adding to positive sentiments," said Ben Westmore, a Melbourne-based commodities analyst at National Australian Bank.

Industrial output in Japan, the world's No. 3 energy consumer, rose 1.9 percent in July to increase for a fifth straight month as exports recovered on the back of stimulus spending around the world, and the pace of rise is expected to accelerate in the coming months.

Increased risk appetite on the back of bullish economic data helped pushed the U.S. dollar to its lowest again the yen in seven weeks, while the U.S. dollar index fell 0.13 percent to 78.265 points.

Asian stocks are set for a steady start on Monday, as weak U.S. data prompted a cautious view about the global recovery, although a decisive Japanese election results is seen removing uncertainty from markets.

Meanwhile, Qatar's Oil Minister Abdullah al-Attiyah said on Sunday that OPEC was likely to keep oil production targets unchanged when it next meets in September.

On the weather front, Hurricane Jimena blew into a dangerous Category 4 storm off Mexico's Pacific Coast and was on track to hit resorts on the Baja California peninsula on Tuesday, although there were no threats to oil rigs.

Separately, Iran has slowed its expansion of uranium enrichment and met some demands for transparency but allegations it researched how to build atom bombs looked credible and the U.N. atomic watchdog said Tehran had to address them.

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