Oil prices rise on improving global demand outlook

January 04, 2011 | 11:10

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Oil prices rose on Monday, reaching new two-year highs amid confidence in increased global demand after the US economy showed more signs of recovery.

New York's main contract, light sweet crude for February delivery, closed at $91.55 a barrel, up 17 cents from Friday, after earlier hitting $92.10, a level last seen in October 2008.

London markets were closed on Monday in observance of the New Year holiday, but in electronic trading on the InterContinental Exchange (ICE) Brent North Sea crude for February rose nine cents to $94.84.

It had earlier hit $96.17, also its highest level since October 2008.

"Oil sentiment has turned decidedly bullish, partly driven by unusually cold weather, but more due to an increasingly optimistic consensus view on 2011 economic performance, especially for the US," analysts at JPMorgan Chase said in a client note.

The Institute for Supply Management reported on Monday that US manufacturing activity grew for the 17th straight month in December, bolstering confidence that the US economic recovery was gaining momentum.

And the Commerce Department reported construction spending rose by 0.4 per cent in November to reach its highest point in five months.

Traders were also heartened by data released by China on Saturday showing manufacturing growth eased last month, suggesting Beijing's attempts to cool the soaring economy could be working.

AFP

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