Oil prices rose above $77 a barrel Monday, helped by a weaker U.S. dollar and forecasts indicating global crude demand will improve next year.
By early afternoon in Europe, benchmark crude for December delivery was up 82 cents to $77.17 a barrel in electronic trading on the New York Mercantile Exchange. On Friday, the contract fell to as low as $75.57, the cheapest since Oct. 15, before settling down 59 cents at $76.35.
Some analysts expect oil demand to grow next year, especially in emerging economies, as a global economic recovery strengthens. Bank of America Merrill Lynch raised its forecast for the average price of crude to $85 a barrel from $75.
“The deceleration in global oil demand growth is easing,” the bank said in a report. “No doubt, real oil consumption continues to display cyclical weakness.”
“The combination of tighter physical oil supply and demand fundamentals, loose monetary policy, and a weaker U.S. dollar are creating a growing risk for oil prices to spike above $100 a barrel as we head into 2011.”
The euro was up to $1.4963 Monday from $1.4923 on Friday while the dollar was down to 89.52 Japanese yen from 89.63 yen.
“There is not much else than the Dollar Index driving the global markets,” said analyst Olivier Jakob of Petromatrix in Switzerland.
A cheaper dollar makes oil cheaper for investors holding other currencies.
“If the dollar’s weakness is removed from the equation, oil prices are easily way too high at existing levels,” said a report from U.S. energy consultancy Cameron Hanover.
Oil prices have soared from $32 in December as the financial crisis stabilized and economies emerged from recession.
“The epoch of cheap oil price is over,” Gazprom Deputy Chairman Alexander Medvedev said Saturday at the Asia Pacific Economic Cooperation summit. “The price of oil will be anywhere in the region of $75 to $85 in 2010.”
In other Nymex trading, heating oil rose 2.02 cents to $1.9863 a gallon. Gasoline for December delivery gained 1.54 cents to $1.9316 a gallon. Natural gas for December delivery advanced 4.0 cents to $4.432 per 1,000 cubic feet.
In London, Brent crude for December delivery rose 80 cents to $77.11 on the ICE Futures exchange.
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Associated Press writer Alex Kennedy in Singapore contributed to this report.
Business
<img src=" http://www.joplinglobeonline.com/images/zope/monday.gif" border=0> Oil rises above $77 as traders eye dollar, demand
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