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Oil climbs above $92

04 January, 2011

LONDON: Oil extended a rally above $92 a barrel on Monday, spurred by expectations that a global economic recovery is gathering strength and as market bulls set their sights on $100 a barrel.

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US crude was trading 77 cents higher at $92.15 a barrel by 1108 GMT, just off a session high of $92.20, its highest since October 2008. It settled at $91.38 on Friday, marking an annual gain of around 15 percent and the highest year-end price since 2007.

Brent was up $1.20 a barrel at $95.95, off an intraday peak of $96.04, also the highest since early October 2008.

Trade was thinned by a public holiday in the United Kingdom but could take direction later on Monday from a survey by the Institute for Supply Management (ISM) — a measure of US national factory activity.

It was expected to show a slight expansion in the manufacturing sector, reinforcing the view the economy in the world’s largest oil consumer is expanding and therefore driving up energy demand.

“Traders will be looking at the string of US economic numbers coming out this week to see if they can sustain the strong price moves in December. Overall, we expect the market to be well bid. How bid? Well, it depends on the data,” said Geoff Howie, markets strategist at MF Global in Singapore. Commodities as a whole embarked on a compelling rally in September last year, driven by expectations of quantitative easing and a weakened US dollar, which tends to be bullish for dollar-denominated commodities.

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