London: Oil rose for a third session on Monday to hit the highest in more than three weeks near $69 a barrel as stock markets gained on hopes of an economic recovery that would boost fuel demand.
European stocks firmed slightly following gains in Asia, where equities rose for the ninth day in 10 as investors focused on better corporate earnings and moving money into riskier, higher yielding assets.
US crude, which has risen in eight of the last nine trading days, climbed 50 cents to $68.55 by 0952 GMT. Prices hit an intraday high of $68.99, the highest since 2 July. Brent crude rose 61 cents to $70.93.
“As we are still in the earnings season and have to face some key inputs on the U.S. economy this week, the oil markets are still likely to be lead by equities,” said Olivier Jakob, oil analyst at Petromatrix.
Oil and other commodities have tracked equities markets in recent months as analysts seek signs of the economic outlook after the downturn cut world energy demand for the first time in a quarter century.
This week’s earnings include Exxon Mobil, Honda Motor, Motorola, Deutsche Bank and BP. Data this week includes June U.S. new homes sales later on Monday and US second-quarter gross domestic product figures on Friday.
“The US GDP number could be the key exogenous input of the week,” Jakob said.
A faster rebound in Asian economies, led by China, would offer further support for oil prices in coming months, some analysts said.
“The central factor in determining the speed of adjustment in oil products will be the pace of recovery in Asia,” Barclays Capital said in a note.
“The sensitivity of oil demand to economic growth is greater in Asia than in other regions, and the tendency for economic growth to surprise consensus estimates on the upside also appears to be greater in Asia.”
World oil consumption will rise for the first time in two years in 2010 as a recovery in the global economy boosts demand, according to a Reuters poll of top oil-tracking analysts and organisations.
But the expected increase of 1.1% worldwide is unlikely to drain away all the excess supplies, despite the slow growth in production outside the Organization of the Petroleum Exporting Countries.
Oil demand will rise by 900,000 barrels per day (bpd) to 84.9 million bpd in 2010, the poll of nine forecasters found. World demand has fallen by 2.5 percent since hitting 86.2 million bpd in 2007, as the dual impact of high prices and the economic crisis cut consumption.