Oil highest since August

Oil jumped more than two per cent towards $74 a barrel yesterday, the highest in over six weeks, on optimism about the pace of global economic recovery and indications of stronger oil demand.

Crude gained 2.6 per cent last week, bolstered by a falling dollar. The International Energy Agency raised its oil demand forecasts and a Reuters survey showed Chinese refineries will keep crude processing at record levels in October.

US crude rose $1.87 to $73.64 by 1342 GMT. It climbed as high as $73.81, the highest since it reached a 2009 peak of $75.00 on August 25. Brent crude added $1.86 to $71.86.

"The break above $70 has been important as it moves the market into a new and higher trading range," said Christopher Bellew, a broker at Bache Commodities, referring to Brent.

"The better Chinese demand figures published last week and the resilience of equities and gold and a weak dollar have all contributed to this upward move in oil prices."

The US dollar eased against a basket of currencies, further supporting oil, while gold rose. Dollar weakness can boost investor demand for oil and other commodities priced in the US currency.

Signs emerged yesterday that while world energy demand is expected to rise more strongly than forecast next year, key exporters are continuing to keep a lid on supplies for now.

Saudi Arabia, the world's top oil exporter, will keep steady in November its curbs on the contracted volumes of crude it supplies to Asia and Europe, industry sources said.

 

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