Oil hits 17-month high amid optimism on economy
Published 07/04/2010 | 05:00
CRUDE oil rose to a 17-month high on speculation that global demand will increase as the world economy recovers from recession.
A report today in the US, the world's largest oil consumer, is expected to show that service industries expanded for a third month in March, according to a survey of economists.
Oil prices have established a floor of $75 a barrel, Venezuelan oil minister Rafael Ramirez said last week, adding that there was no need for the Organisation of Petroleum Exporting Countries (OPEC) to increase production.
Crude oil for May delivery rose as much as 81 US cent, or 1pc, to $85.68 a barrel in after-hours electronic trading on the New York Mercantile Exchange, the highest since October, 2008.
It was at $85.62 shortly after 8am in Tokyo. The contract rose $1.11, or 1.3pc, to $84.87 on April 1. Prices climbed after reports showed Chinese, European and US manufacturing expanded, while pessimism also decreased among Japan's largest industrial companies.
A US labor department report yesterday showed that the US economy had gained 162,000 jobs in March, the biggest jump in three years.
Oil traded within a range of $68 to $84 a barrel in the six months ended March 30.
Prices climbed in the past two months as improved investor confidence lifted world equity markets and US refining climbed from a 16-month low.
Still, US stockpiles of crude oil have posted nine straight weekly increases. It held 354.2 million barrels on March 26, 6.5pc above the five-year average for the period, the US energy department said last week.
OPEC pumps about 40pc of the world's oil. It slashed output in January 2009 in order to prevent a glut. The group left its production targets unchanged when ministers met in Vienna on March 17.
Venezuela, the group's sixth-largest producer, is seeking a price band between $80 and $100 a barrel, Rafael Ramirez told reporters in Caracas on April 2. Prices are benefiting from OPEC's decision to maintain production restrictions, President Hugo Chavez said on state television on April 1.
Brent crude oil for May settlement rose 66 US cent, or 0.8pc, to $84.67 a barrel on the London-based ICE Futures Europe exchange.
The contract climbed 1.6pc to $84.01 on April 1, the highest settlement since October, 2008.