Oil rose above $64 a barrel on Monday, extending last session"s 2.5 percent gains, bolstered by a rally in Asian stocks and fall in the dollar on hopes of a global economic recovery.
Oil rose above $64 a barrel on Monday, extending last session"s 2.5 percent gains, bolstered by a rally in Asian stocks and fall in the dollar on hopes of a global economic recovery. Oil jumped 6.1 percent last week ? its first weekly gain in a month ? thanks to a series of positive economic data and a rally in the equities markets, which came on the back of better-than-expected U.S. corporate earnings.
The increase in risk appetite also knocked the dollar, with the euro rising to a three-week high on Monday. U.S. crude oil for August delivery rose 65 cents to $64.21 a barrel by 0645 GMT, after settling up $1.54 at $63.56 on Friday. London Brent crude for September rose 62 cents to $66.00. ?Gains in the stock markets are lifting risk appetite, which is helping to push oil prices higher,? Ben Westmore, a commodities analyst at the National Bank of Australia. The MSCI index of Asia Pacific stocks outside Japan climbed for a fifth session to the highest since late September 2008 on Monday, with hopes for corporate earnings lifting sentiment across the board. Oil"s gains on Friday were boosted by a government report that showed construction of new homes and the issue of building permits in the United States rose more than expected in June, signaling a potential economic recovery. Tensions in Iran, the world"s fifth-largest crude exporter, as well as worries about a tropical wave in the Central Atlantic, which has a small chance of developing into a tropical cyclone ? also helped buoy oil prices. Iran"s President Mahmoud Ahmadinejad has come under fire from leading hardliners for naming as his top deputy a man who said Iran was friends with everyone, including arch-foe Israel, local media said on Sunday.
But with oil prices having rebounded by nearly $4 last week, some analysts are cautioning against excessive optimism as the latest inventory data in the United States was still painting a bearish picture for energy demand.
?As was the case with the March-June upward trend and the subsequent correction, price action in recent days has been, in our view, driven by non-fundamentals,? Michael Wittner, global head of oil research at Societe Generale, said in a report.
?When prices are being driven by non-fundamentals, we are cautious, and doubly so when trying to call a turn,? Wittner said, adding that technical analysis indicates that another downward move on oil prices should be expected this week.
In a sign that investors were now more bullish on oil prices, crude oil speculators on the New York Mercantile Exchange increased their net long positions in the week to July 14, according to data from the Commodity Futures Trading Commission released on Friday. Open interest was concentrated at the $65 and $70 September call crude oil option and at the $60 put option.