London: Oil rose towards $69 a barrel on Tuesday in its most sustained rally since hitting record highs in July last year, supported by renewed optimism over global economic recovery.
US oil futures looked set to rise for a tenth straight session on Tuesday, consecutive daily gains not seen since prices hit a high of $147.27 last year.
US crude rose 15 cents to $68.51 a barrel by 2:20pm, after surging to $68.99 on Monday, the highest since 2 July, spurred by robust US homes sales data.
London Brent crude rose 27 cents to $71.08 barrel, off an earlier four-week high at $71.35.
Hopes that the global economy would emerge from the recession and lift falling oil demand have helped push crude prices up from below $33 a barrel in December, where it had fallen from record peaks near $150 hit in July last year.
“I think it is still external factors lifting prices today, rising stocks markets and economic optimism after the US home sales data yesterday,” said Carsten Fritsch at Commerzbank.
European stock markets were slightly higher on Tuesday, set for an eleventh day of gains in 12 sessions, while Asian stock markets paused on Tuesday after surging about 16% over two weeks.
Oil giant BP reported a mixed set of second quarter results on Tuesday. BP is the first of the top tier of Western oil companies, known as the five Supermajors, to report their second quarter results.
Although it reported a halving in second quarter profits, oil and gas production was up 4% and BP’s cost saving target was raised to $3 billion, from $2 billion.
Investors were awaiting US weekly oil inventories in which a Reuters poll forecast a 300,000-barrel drop in crude stocks and a 600,000-barrel fall in gasoline. Distillates stocks are projected to have risen by a hefty 1 million barrels.
“The inventory data could definitely be market moving overnight especially when refiners have shut down some capacity due to maintenance work,” Fritsch said.
The American Petroleum Institute data is scheduled for late Tuesday while the report from the US Energy Information Administration (EIA) is due out on Wednesday.
Oil markets remained pressured by poor global demand for diesel and jet fuel, with volumes stored at sea rising by 10 million barrels since mid-June to 72 million barrels, enough to meet 85% of daily global demand.
Saudi Aramco’s oil output capacity touched 12 million barrels per day last month when three new oilfield projects started, one of which is the Shaybah oilfield expansion, the al-Hayat newspaper quoted the firms’s chief executive as saying.
CEO Khalid al-Falih was also confident that the global fall in oil demand was temporary and consumption growth would eventually resume.
Investors were awaiting with caution Friday’s US GDP data, expected to show a fourth-straight quarter of contraction.
US crude oil is expected to average nearly $73 a barrel in 2010, a Reuters poll showed on Tuesday, as oil demand improves, albeit at a sluggish pace.