Oil prices extended their rally Wednesday on growing expectations for demand as the global economy recovers, though equity investors trod a more cautious line as inflation fears continue to cast a shadow over trading floors.

While some countries are struggling in their battle with the coronavirus, the general mood among dealers is upbeat that the global economy is rebounding sufficiently strongly as vaccines are rolled out and parts of the planet slowly return to a semblance of normality.

And one of the biggest beneficiaries of that is the crude market, with demand for the commodity picking up as people begin travelling again and factories restart.

Both main contracts have rocketed from the dark days of last April -- when they crashed in reaction to the imposition of lockdowns around the world to contain the pandemic -- helped by top producers slashing output.

But with the world recovery now on track, the 23 oil-rich nations of the so-called OPEC+ group, are now confident that demand will increase enough for them to open the taps further.

On Tuesday, the group agreed to continue lifting output in July, having started slowly doing so in early May.

"The demand picture has shown clear signs of improvement," said Saudi Energy Minister Prince Abdulaziz bin Salman. And Russian Deputy Prime Minister Alexander Novak said: "We see that demand has increased, that prices have stabilised," and spoke of a "normalisation" of the global economy.

That came after the International Energy Agency said the second half of the year could see a gap between demand and supplies, which could push prices even higher.

However, the group gave little away about plans for August and its views on the possibility of Iranian oil coming back to the market if it seals a nuclear deal with world powers that will lift sanctions on the country.

- US jobs in view -

WTI on Tuesday rose to $68.87 -- its highest level since October 2018 -- while Brent peaked at $71.34, before they pared gains. However, they continued to be supported in Asian trade Wednesday and observers suggest they could break higher.

The bump in oil has given a fillip to energy firms, though broader markets in Asia struggled to build on recent gains.

Tokyo, Sydney, Seoul, Taipei, Manila and Jakarta all rose but Hong Kong, Shanghai, Singapore and Wellington dipped.

The mixed performance followed a tepid lead from Wall Street, with analysts saying a slow rebound in US employment take-up dampened spirits.

While companies are reopening and rehiring, observers pointed out that many people were yet to return owing to various factors including lingering virus concerns and government handouts as part of Joe Biden's stimulus package passed earlier this year.

"No one is abandoning the US growth exceptionalism trade, but optimism for a swift labour market recovery is fading and might complicate Wall Street's assessment of the US consumer," said OANDA's Edward Moya.

Investors will therefore be keeping a close eye on the release of May jobs creation data this week, having been massively disappointed by April's reading.

A forecast-busting reading could also weigh on market sentiment as it would add to long-running worries that the strong economic rebound will fire price rises and force the Federal Reserve to wind back its ultra-loose monetary policy.

US inflation hit a 13-year high in May, and other governments are seeing similar advances with the eurozone reading at a two-and-half-year peak and South Korea's at a nine-year high.

Still, the Fed has said it sees the gains as transitory owing to last year's low base, spiking energy costs and supply problems.

- Key figures around 0300 GMT -

Tokyo - Nikkei 225: UP 0.5 percent at 28,946.84 (break)

Hong Kong - Hang Seng Index: DOWN 0.2 percent at 29,398.52

Shanghai - Composite: DOWN 0.5 percent at 3,608.28

West Texas Intermediate: UP 0.5 percent at $68.07 per barrel

Brent North Sea crude: UP 0.5 percent at $70.62 per barrel

Pound/dollar: UP at $1.4161 from $1.4148 at 2200 GMT

Euro/dollar: UP at $1.2225 from $1.2214

Euro/pound: UP at 86.33 pence from 86.31 pence

Dollar/yen: UP at 109.61 yen from 109.47 yen

New York - Dow: UP 0.1 percent at 34,575.31 (close)

London - FTSE 100: UP 0.8 percent at 7,080.46 (close)

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