Oil rise above US$85
Oil prices rose to 17-month highs Thursday on further signs that a global economic recovery would boost consumption.
In New York the price of a barrel of light sweet crude for delivery in May rose over a dollar to US$84.87 by the end of trade on Thursday, up from US$83.76 the day before.
During trade the price briefly rose above US$85, the highest level since October 9, 2008.
Brent North Sea crude for May also hit a similar high at US$84.04, before pulling back slightly to 83.96, up US$1.26.
“Decent data around the globe have offered a positive backdrop,” said analysts at Sucden Financial Research in a note to clients.
In the United States, the world’s largest energy market, the manufacturing sector grew for an eighth consecutive month in March, and at a faster pace than expected.
The Institute for Supply Management said its purchasing managers index rose to 59.6 per cent in March from 56.5 per cent in February, chalking up the fastest rate since July 2004.
“Funds (which) have been reported as getting out of the oil market recently have also been reported as re-entering the oil market today, at the start of a new quarter,” said Sucden.
Manufacturing in the eurozone defied forecasts in March, hitting a 40-month high as the Markit research group’s PMI rose 2.4 points from February to 56.6 points in March — the sixth consecutive month above the boom-or-bust 50-point line.
There was also positive news from the manufacturing sector in China, the world’s second biggest oil consuming nation, while Japan’s Tankan survey indicated a steady improvement of business confidence.
Oil had rallied sharply on Wednesday, driven by a weaker dollar, before paring gains on a report which showed a larger-than-expected build in US crude stocks.
Investors saw the price pushed up by increased demand from refiners, who were trying to capitalize on market prices.
“Refiners, seeing the best margins for a year, are booking crude during the seasonally weak demand period to ramp up runs,” JP Morgan analysts told clients.
“Right now it looks likely that we will see a significant increase in refinery throughput on both sides of the Atlantic.”
