Oil surged ahead for the second straight day yesterday as prices that were sliding lower for two weeks abruptly switched direction on economic reports that suggest demand for crude could improve.

The jump in the past two days is the latest swing on the price seesaw over the past two months or so. Prices jumped about 20 per cent from mid-December to a 15-month high last month only to slide more than 10 per cent through the end of the month.

Benchmark crude for March delivery rose US$2.02 to US$76.45 a barrel on the New York Mercantile Exchange. The contract rose US$1.54 to settle at US$74.43 on Monday.

“I tell my clients, ‘Don’t get too comfortable on either side of this market,”‘ said Jim Ritterbusch of Ritterbusch and Associates.

He said many of the factors behind this two-day rally were the same reasons why oil jumped to nearly US$84 a barrel last month: an improving stock market, a strong manufacturing report on Monday that suggests improving demand for oil, cold weather expected through mid-February that should push up heating oil consumption, and China importing large amounts of oil.

Still, indicators that oil demand will improve have not panned out so far. Demand has continued to run well below the weak levels of a year ago.