Oil price rises on hopes of US recovery

3rd January 2011, Comments 0 comments

Oil rose in electronic trading in Europe on Monday on expectations that an improving US economy will lead to higher demand for crude in the world's biggest oil consumer, analysts said.

London markets were closed on Monday for the New Year holiday, but in electronic trading on the InterContinental Exchange (ICE) Brent North Sea crude for February was trading at 95.80 dollars at 1100 GMT, a gain of 1.15 dollars from Friday's close.

It had earlier hit a two-year high of 95.82 dollars.

New York's main contract, light sweet crude for February delivery, was trading at 92.09 dollars, up 71 cents from Friday.

Moments earlier it had hit 92.10 dollars, a price level last seen in October 2008.

The two contracts have been hitting two-year highs on hopes that improved US economic momentum will bolster global growth and translate into higher oil demand, analysts said.

"We've noted an optimism among investors regarding the New Year, for a recovery in the United States," said Micaella Feldstein, a commodities strategist at Natixis bank.

Oil was also boosted by the dollar gaining against the euro.

At 1000 GMT the euro was trading at 1.3303 dollars against 1.3381 late on Friday.

"A stronger US dollar means that the US economy is gaining momentum, which increases the future demand in oil," said Ong Yi Ling, an investment analyst from Phillip Futures in Singapore.

© 2011 AFP

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