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NEW YORK: Oil prices struck levels unseen in more than a year on Monday amid rising economic recovery optimism and a weakening US dollar, with the key New York contract nearing 80 dollars per barrel.
Over the last eight trading sessions, prices have risen up to 10 dollars per barrel on expectations of higher demand as the global slump eased, especially on recovery prospects in the United States, the largest energy consumer.
New York's main contract, light sweet crude for November delivery, ended 1.08 dollars higher to 79.61 dollars a barrel. It hit an intra-day peak of 79.69 dollars, the highest level since mid-October 2008.
London's Brent North Sea crude for December delivery gained 78 cents to close at 77.77 dollars.
Oil prices have climbed rapidly amid the weakening US dollar and with many US companies declaring better than expected financial results in the third quarter on expectations of recovery from recession.
"The positive sentiment across financial markets has been interpreted as a harbinger of oil demand growth, allowing crude oil prices a 10 percent appreciation during October," said analyst Mike Fitzpatrick of MF Global.
"As (third quarter) earnings reports continue to be filed, they will serve to reveal this strategy as either an illusion or confirmation that sustainable recovery is underway," he said.
Independent analyst Ellis Eckland said the market was "at the very bottom of the weak demand season" on expectations of stronger demand ahead of the winter season in the United States.
"Oil will probably be over 80 dollars for most of the winter and it may go higher," he said. "We're poised for a big pickup in demand because of China," where growth is back on the upswing after a breather following a global financial crisis, he added.
Meanwhile, London-based energy consultancy CGES warned Monday that the oil market was "vulnerable" to "misreading" the signals about the strength of a global economic recovery.
"The world appears to be coming out of recession but growth remains fragile and patchy," the influential Centre for Global Energy Studies (CGES) said in a monthly report.
"Governments have pumped unprecedented amounts of money into the global economy and will need to carefully manage the endgame of the stimulus.
"Oil prices are being driven by wider economic forces and remain vulnerable to the misreading of economic signals," it added.
A struggling US dollar has also given a lift to oil prices. A weaker dollar makes greenback-priced crude cheaper for buyers holding stronger currencies, which tends to stimulate demand.
Oil prices tumbled from historic highs of more than 147 dollars in July 2008 to about 32 dollars in December because of the global recession but have since risen on recovery hopes. - AFP/de
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