Oil prices rise as global markets firm, dollar comes off highs

SINGAPORE (Reuters) - Brent crude futures rose above $60 a barrel on Tuesday, after a sharp drop in the previous session on record U.S. stocks, as firm Asian markets supported prices.

Most Asian stock markets edged up, bolstered by another record day on Wall Street, while a resurgent yen helped knock the U.S. dollar index off an 11-year high, making commodities priced in the greenback cheaper for holders of other currencies.

Front-month Brent futures were trading at $60.40 a barrel at 2330 ET, up 86 cents from their settlement. U.S. WTI futures were up 35 cents at $49.94 a barrel.

A drop in U.S. rig counts is also boosting oil prices, analysts said.

"Brent crude prices (are) attempting to rally on rapid week-on-week reduction in U.S. ... rig count," Morgan Stanley said on in a note on Tuesday.

U.S. oil rig count fell by 33 rigs last week.

"The current U.S. horizontal and vertical rig count across the Permian, Eagle Ford, Bakken and Niobrara shale plays implies that U.S. oil production growth will reach 385,000 b/d (barrels per day) y-o-y by 4Q15, down 55 kb/d versus last week's rig count," Goldman Sachs said on Monday. [ID:nL5N0W40CM]

Despite the slowing rig count, U.S. production as well as output in the Middle East remains high, adding to an oversupplied market that could keep a lid on oil prices.

"Saudi, UAE, Iraqi and other Middle East production and exports (are) all higher TYD (to year date) adding to supply pressure," Morgan Stanley said.

Brent futures fell almost 5 percent on Monday, its biggest daily drop in a month, as a build in U.S. inventories for seven straight weeks to a record high weighed on markets. [EIA/S]

The sharp drop in oil prices, down from over $100 last June, has, however, come as a boon for Asian importers who are seeing huge benefits as their fuel costs drop, analysts said.

"Cheap oil is a blessing for Asia, the drop in oil prices provide windfall effects for Asia's large net oil importers," Dutch bank ABN Amro said in its quarterly outlook.

The bank said it expected cheap oil to trigger increased growth in India, Hong Kong, Singapore and Thailand, but added that China's slowing economy could still turn into a hard landing despite the gains from lower energy prices.

(Editing by Himani Sarkar)

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