Oil prices have risen to 10-month highs in yet another sign that the global economic recovery is gathering pace.
The price of crude rose to $75 a barrel yesterday as part of a broad global rally in commodities and equities markets propelled by expectations for an economic recovery.
US crude rose 59 cents to $74.48 a barrel by 4pm after peaking at $74.81, the highest intraday price since October 21, while Brent crude gained 16 cents to $74.35.
The gains came as world equities markets pushed firmly into positive territory on rising hopes for an economic rebound. Commodities markets have tracked stock indexes closely in recent months as dealers view equities as a lead indicator of economic performance, and global rises yesterday sent prices surging.
Analyst Mike Fitzpatrick, vice-president at MF Global, said: “Oil continues to ride a wave that is propelled by a fear of rising inflation and currency devaluation, OPEC members’ unusually high level of compliance with production constraints, and a high level of oil importation into China.”
A report published yesterday implied oil demand in China, the world’s No.2 energy consumer, rose in July for the fourth consecutive month as refiners ramped up activity.
Meanwhile, hopes of the end of the recession were boosted when new industrial orders in the euro zone rebounded in June and US economic activity improved again in July.
A string of positive economic data from various countries and rallying stock markets helped lift oil prices by 9.5 per cent last week. Crude is up more than 65 per cent in 2009 and may head higher still, according to analysts.
“We could now easily move towards the $80 mark, if the growing enthusiasm about the budding economic recovery continues to dominate sentiment,” said Edward Meir, of MF Global.