LONDON: Oil crept up to near $74 a barrel on Monday within sight of a 10-month high, supported by optimism that an economic recovery will spur a rebound in energy demand.
A string of positive economic data from various countries and rallying stock markets helped lift oil prices by 9.5% last week. But traders said prices were unlikely to rally much further for the time being.
“Earlier on, we were picking up some support from the stronger stock market, particularly the fact that the Chinese stock market had held onto its gains,” said Christopher Bellew, a broker at Bache Commodities.
“There’s a lot of resistance around $75-$76 for Brent. It’s unlikely to break on the upside.”
US crude rose 11 cents to $74.00 a barrel by 4:28PM. The contract settled up 98 cents at $73.89 on Friday, the highest settlement since 20 October. Brent crude gained 8 cents to $74.27.
Crude is up more than 65% in 2009 and may head higher still, according to some 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.
Oil’s gain on Friday followed home sales data for July showing recovery in the US housing market, while Federal Reserve chairman Ben Bernanke also said the global economy appeared to be recovering.
Growing signs of an economic improvement helped to spur risk appetite, prompting Asian stocks to jump more than 2% on Monday and Chinese equities to rise 1.1%. European stocks opened higher.
In China, the world’s second-largest oil consumer, apparent oil demand rose 3.5 percent in July from a year earlier - the fourth rise in a row, Reuters calculations from official data showed.
On the weather front, Hurricane Bill weakened to post-tropical storm status on Monday after lashing Eastern Canada with heavy winds and rain and pounding the US East Coast with heavy seas that killed two people.
Energy traders watch Atlantic storms in case they disrupt oil and gas facilities. Some companies with offshore oil and gas platforms said output had not been affected.
Renewed tensions in Nigeria could also add support to oil.
Nigeria’s main rebel group said on Saturday it would resume attacks against Africa’s biggest energy industry next month, overshadowing the surrender of hundreds of arms by rebels in a federal amnesty programme.