Oil jumps on recovery hopes
Crude briefly hits $85, a 17-month high, as traders see more evidence that the U.S. and global economies are improving.
Updated: 6:40 p.m. ET.
There's a downside to an economic recovery. It may well mean higher oil and gasoline prices.
In fact, crude oil briefly hit $85.22 a barrel today before drifting back to $84.87 a barrel. The close was the highest since Oct. 9, 2008.
Crude is up 6% this week alone -- and 7% this year -- after jumping 78% in 2009. Gasoline, if you use data from AAA's Daily Fuel Gauge Report, is up about 6% on top of a 63% gain in 2009.
"The economic news recently has generally been good, which has changed the perception of the oil market," Sarah Emerson, managing director of Energy Security Analysis in Wakefield, Mass., told Bloomberg News. "An economic recovery is always good for demand."
The latest evidence of recovery:
The Institute for Supply Management’s index of manufacturing in the U.S. rose to 59.6 in March from 56.5 a month earlier, the fastest pace since July 2004.
A reading above 50 indicates expansion. Economists forecast a gain to 57, Bloomberg said.
The Purchasing Managers’ Index for China rose to a seasonally adjusted 55.1 in March from 52 the previous month, Hong Kong-based Li & Fung Group said today. In Japan, the Tankan index of sentiment jumped to minus-14 in March from minus-25 in December. The U.S., China and Japan are the three biggest oil- consuming countries.
But while the recovery news is improving, the jobs picture remains weak both in the United States and Europe.
The reports helped push natural-gas futures up 6.6% to $4.125 per million British thermal units.
Energy stocks were higher. Exxon Mobil (XOM) was up 0.9% to $67.61. Chevron (CVX) added 1.1% to $76.69. Transocean (RIG) jumped 2.8% to $88.77, and Apache (APA) rose 2.3% to $103.87.
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