Friday July 24, 09:00 PM
Oil prices rise on brighter economic outlook
NEW YORK (AFP) - Oil prices rose Friday, powered higher by growing optimism that the recession-stricken US economy is on the mend after a series of positive corporate earnings reports.
New York's main futures contract, light sweet crude for September, climbed 89 cents to close at 68.05 dollars a barrel.
In London, Brent North Sea crude for September delivery increased 1.07 dollars to settle at 70.32 dollars a barrel.
The rise in prices "was sharply buoyed by positive economic sentiment," and the upward trend is expected to persist, said Amrita Sen of Barclays Capital.
Even though the euphoria was tempered somewhat, oil prices advanced.
"Higher stock prices suggest higher aggregate output which spells increasing energy demand," said Mike Fitzpatrick of MF Global.
"Short-term upward momentum though still appears quite strong, but unless strong signs of sustainable growth appear soon, that momentum could dissipate rather quickly," he added.
The oil market has found support in a flood of US earnings reports and economic data that was not as bad as feared as the world's largest energy consumer struggles with recession. Crude oil has gained nearly 10 dollars in New York over the past two weeks.
Positive data on the eurozone and German economies Friday also gave oil a lift.
A purchasing managers' report showed activity in the eurozone manufacturing and service sectors rose to 46.8 points in July from 44.6 in June, the highest reading since September 2008.
In Germany, Europe's biggest economy, the Ifo institute's business climate index for July rose to 87.3 points, beating market expectations of 86.5 points and up from 85.9 points in June. It was the highest reading since November 2008.
Phil Flynn of PFG Best Research cautioned that the rise in oil prices was not supported by economic fundamentals.
"Oil has ignored bearish supply and demand fundamentals as the fundamentals of expectations of an improving economy seem to be a bit more exciting," Flynn said.
"After this pop, oil will fall hard."
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