Oil gains on US; Brent hits new high
Singapore, April 26, 2010
Oil rose on Monday, pushing Brent crude to a fresh 18-month high, as robust manufacturing and home sales data in the US buoyed hopes of a sustained economic rebound in the world's top energy user.
Traders awaited cues from US April consumer confidence data, due on Tuesday, as well as the outcome of the Federal Reserve's two-day policy-setting meeting starting the same day.
Analysts widely expected the Fed to keep interest rates near zero and stick to its pledge of low borrowing costs for an extended period to foster the US recovery.
US crude for June delivery rose 16 cents to $85.28 a barrel by 0622 GMT, after settling up $1.42 on Friday.
The front-month contract for London ICE Brent crude rose 25 cents to $87.50, after having touched $87.65 earlier in the day, the highest price since early October 2008.
"For the time being, there's a little more optimism in the market today, thanks to the good economic numbers that came out of the United States, and the fact that Europe has reopened its airspace and the ash cloud problem is settling down," said Keiichi Sano, general manager of research for SCM Securities in Tokyo.
Expectations that jet fuel demand would rebound also lifted sentiment, as European flights resumed after the threat from an ash cloud fed by a volcano in Iceland receded.
European air traffic returned to normal after the end of almost all curbs prompted by the volcanic ash cloud, European air traffic agency Eurocontrol said on Friday.
Sano expects US crude to trade in a range of $80-$87 a barrel in the near term, as prices have been boosted by signs that the US economic recovery is slowly gaining momentum.
Sales of newly built US single-family homes rebounded strongly in March to touch their highest level in eight months, as buyers rushed into the market to take advantage of a homebuyer tax credit, a government report showed on Friday. - Reuters