Oil prices jump above $75 a barrel to 1-year high
SINGAPORE: Oil prices jumped above $75 a barrel Wednesday in Asia for the first time in a year on investor optimism crude demand will improve ahead of the Christmas shopping season.
Benchmark crude for November delivery was up 73 cents to $74.88 by late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The price reached $75.15 earlier in the day, the highest since October 2008.
The contract gained 88 cents to settle at $74.15 on Tuesday.
Oil has traded between $65 and $75 since May as traders have mulled mixed crude supply and demand data.
Some analysts expect an increase in diesel fuel demand from U.S. truckers supplying inventory for the year-end holiday shopping season will trigger a sustained rise above $75.
"We believe oil prices are poised to move higher," Goldman Sachs, which expects prices to rise to $85 a barrel by the end of the year, said in a report. "All indicators still point to a normal seasonal pick-up in shipping to retailers this year."
A weak dollar is also bolstering crude prices. The euro rose to $1.4890, the highest since August 2008, in Asian trading from $1.4852 the previous day while the dollar slid to 89.15 yen from 89.69.
Burgeoning oil supplies this year have weighed on oil prices. Investors will be looking to the latest U.S. inventory data later on Wednesday and Thursday from the American Petroleum Institute and the Energy Information Administration.
"The problem is really that we have a lot of crude inventory," said Victor Shum, an analyst with consultancy Purvin & Gertz in Singapore. "This supply overhang makes the price vulnerable to any bad economic news, which we still get from time to time."
"It's more likely the price will hang around $70."
In other Nymex trading, heating oil rose 1.42 cents to $1.94 a gallon. Gasoline for November delivery gained 1.85 cents to $1.85 a gallon. Natural gas for November delivery jumped 4.5 cents to $4.63 per 1,000 cubic feet.
In London, Brent crude rose 71 cents to $73.11 on the ICE Futures exchange.