London: Oil rose above $72 a barrel on Monday, extending last week’s rally, on optimism about the pace of global economic recovery and indications of stronger oil demand.
Crude gained 2.6% last week, largely bolstered by a falling dollar, and helped by firmer oil demand forecasts from the International Energy Agency and the US Energy Information Administration.
“There are a lot of positive sentiments in the market because of expectations for another rally in stocks markets this week as well as improved energy demand forecasts from the IEA,” said Ben Westmore, a commodities analyst from the National Australia Bank.
US crude for November delivery rose 45 cents to $72.22 by 1:30pm. The market reached a 2009 high of $75.00 in August. London Brent crude added 50 cents to $70.50.
“Comments from (Federal Reserve chairman) Ben Bernanke that the monetary policy could be tightened is also an indication that the recovery is taking hold in the US.”
A firming dollar limited gains. Investors trimmed dollar-selling positions on caution that US interest rates could move up earlier than expected, supporting the greenback against a basket of currencies.
Signs emerged on Monday that while world energy demand is expected to rise more strongly than forecast, key exporters are continuing to keep a lid on supplies.
Saudi Arabia, the world’s top oil exporter, will keep steady in November its curbs on the contracted volumes of crude it supplies to Asian term buyers, industry sources said on Monday.
With holidays in United States, Japan and Canada on Monday, analysts said oil prices would be largely influenced by equities. European stocks has a firmer opening, but Asian shares fell.
Some of the biggest US corporate names are scheduled to post earnings this week, a reality check for whether a seven-month rally in stocks this year has further to run.