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Oil price rises above US$91 on signs of growth
Source: Agencies |
October 25, 2011, Tuesday
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Oil prices jumped more than 4 percent yesterday, reaching the highest level in more than two months, on signs of economic growth in the US and Asia.
After bracing for a possible recession in the US and Europe, analysts say investors have changed course. They're now trading with the expectation that Western economies will keep growing this year - albeit slowly. As the economy strengthens, demand for oil rises to run factories and fill drivers' gas tanks.
"The market was being held back by fear" of a recession, PFGBest analyst Phil Flynn said. "We haven't seen stellar economic numbers so far, (but) they haven't been recessionary."
Benchmark crude rose US$3.87, or 4.4 percent, to finish at US$91.27 per barrel in New York. Prices haven't been above US$91 per barrel since August 5. Brent crude rose US$1.89 to end at US$111.45 a barrel in London.
Prices rose after news of a string of acquisitions and a better profit forecast from Caterpillar sparked a rally on Wall Street. The Dow jones industrial average and the S&P 500 were up about 1 percent. The Nasdaq was up more than 2 percent.
HSBC said that China's manufacturing sector continues to expand. The bank's measure of industrial production showed Chinese manufacturing activity increased from last month. Energy demand tends to rise as factories crank into a higher gear. Analysts took the report as a sign that China, the second biggest oil consumer behind the US, will continue to drive increases in world oil demand this year.
Japan said exports rose 2.4 percent last month, as its economy recovers from the devastating earthquake and tsunami in March.
Meanwhile European financial leaders planned to boost the eurozone's bailout fund to help keep banks in Italy and Spain from being engulfed in the region's debt crisis. The European Financial Stability Fund is designed to insure banks against potential losses and to keep money flowing through the economy.
In other energy trading, heating oil rose 3.83 cents to finish at US$3.0542 per gallon and gasoline futures increased 1.21 cents to end at US$2.6703 per gallon. Natural gas fell 2.5 cents to finish the day at US$3.604 per 1,000 cubic feet.
After bracing for a possible recession in the US and Europe, analysts say investors have changed course. They're now trading with the expectation that Western economies will keep growing this year - albeit slowly. As the economy strengthens, demand for oil rises to run factories and fill drivers' gas tanks.
"The market was being held back by fear" of a recession, PFGBest analyst Phil Flynn said. "We haven't seen stellar economic numbers so far, (but) they haven't been recessionary."
Benchmark crude rose US$3.87, or 4.4 percent, to finish at US$91.27 per barrel in New York. Prices haven't been above US$91 per barrel since August 5. Brent crude rose US$1.89 to end at US$111.45 a barrel in London.
Prices rose after news of a string of acquisitions and a better profit forecast from Caterpillar sparked a rally on Wall Street. The Dow jones industrial average and the S&P 500 were up about 1 percent. The Nasdaq was up more than 2 percent.
HSBC said that China's manufacturing sector continues to expand. The bank's measure of industrial production showed Chinese manufacturing activity increased from last month. Energy demand tends to rise as factories crank into a higher gear. Analysts took the report as a sign that China, the second biggest oil consumer behind the US, will continue to drive increases in world oil demand this year.
Japan said exports rose 2.4 percent last month, as its economy recovers from the devastating earthquake and tsunami in March.
Meanwhile European financial leaders planned to boost the eurozone's bailout fund to help keep banks in Italy and Spain from being engulfed in the region's debt crisis. The European Financial Stability Fund is designed to insure banks against potential losses and to keep money flowing through the economy.
In other energy trading, heating oil rose 3.83 cents to finish at US$3.0542 per gallon and gasoline futures increased 1.21 cents to end at US$2.6703 per gallon. Natural gas fell 2.5 cents to finish the day at US$3.604 per 1,000 cubic feet.
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