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NEW YORK: Oil prices soared on Tuesday, extending strong day-earlier gains as the market appeared more optimistic about global economic growth and energy demand.
New York's main futures contract, light sweet crude for delivery in March, vaulted 2.80 dollars to close at 77.23 dollars a barrel.
The benchmark contract already had added 1.54 dollars Monday, after falling about 10 dollars since mid-January.
In London, Brent North Sea crude for March surged 2.95 dollars to settle at 76.06 dollars a barrel.
"This is about the improving economic mood this week," said Phil Flynn at PFG Best.
"We've had a strong stock market the last couple of days (and) a strong (US) manufacturing number yesterday seems to suggest that demand for energy is going to be strong."
"And then you have cold weather, a fire in a refinery," he added.
Flynn said that prices also gained a boost from short-covering ahead of the weekly US government's energy inventories report on Wednesday.
The market closely watches the weekly Department of Energy report on petroleum stockpiles in the United States for clues on demand in the world's biggest energy-consuming nation.
Investors also were keenly awaiting US unemployment data for January, to be released on Friday, that may provide insights into whether the economy, whose recovery from recession has been largely driven by government spending, can produce sustainable growth.
Most analysts expect the Labour Department will report the economy created 13,000 jobs, following a loss of 85,000 in December, although the unemployment rate would hold steady at 10 percent.
On the supply front, OPEC chief Abdalla Salem El-Badri said on Tuesday the cartel's oil ministers would be "reluctant" to change their production quotas at an upcoming output meeting in March.
"If things stay as they are, ministers will be reluctant to do anything in March," the secretary-general of the Organisation of Petroleum Exporting Countries said in London.
The 12-nation OPEC cartel, which pumps about 40 percent of world oil supplies, will hold its next scheduled output meeting on March 17 in Vienna, to decide whether it should alter current production quotas.
"Compliance with production quotas has been flagging recently, bringing more oil to market and weighing on prices," said Mike Fitzpatrick of MF Global.
He recalled that Saudi Arabia's oil minister had said that the oil price at a range of 70-80 dollars was good.
"So, for the moment their influence can be felt again," Fitzpatrick said.
El-Badri meanwhile predicted that energy demand, which was ravaged by the global financial crisis and subsequent recession, would not pick up until the second half of 2010.
"We will not see a real pick-up in the demand until the third and fourth quarter this year," he said.
"We see a build-up in the stocks in the first and second quarter," El-Badri added.
At the last OPEC meeting in December, ministers agreed to leave their crude output quotas unchanged and warned of lingering weakness in the world economy.
The cartel's official daily output quota has stood at 24.84 million barrels a day since January 2009. - AFP/de
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