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LONDON - Oil prices rallied back above 80 dollars per barrel on Tuesday, as international banking rescue efforts raised hopes of a global economic recovery and in turn stronger energy demand, dealers said.
New York's main contract, light sweet crude for delivery in November soared 3.31 dollars to 84.50 dollars a barrel in electronic trade.
The contract, which had won 3.49 dollars on Monday, has recovered since striking a one-year low last Friday amid fears of widespread economic meltdown.
On Tuesday, London's Brent North Sea crude for November delivery won 2.78 dollars to 80.24 dollars a barrel in late morning deals, after gaining 3.37 dollars on Monday.
"Prices have risen as government moves to rescue banks have raised hopes for an economic recovery," said Barclays Capital analyst Kevin Norrish.
Global stock markets soared for a second day running on Tuesday, with Tokyo posting its biggest-ever gain after governments worldwide threw lifelines to ailing banks amid the worst financial crisis of the past century.
"The government interventions are probably a good step in trying to unlock the credit freeze, but crude oil will gain (significantly) only when there is unlocking of the demand freeze," said Petromatrix analyst Olivier Jakob.
He added: "Clearly, the global investor is finding more... buying opportunities in equities than in commodities."
Oil was also boosted by the weakening US currency, which makes dollar-priced crude cheaper for buyers with stronger currencies and therefore tends to stimulate demand.
The European single currency advanced Tuesday above 1.37 dollars as the foreign exchange market was also lifted by government assistance for the troubled banking sector, analysts said.
Despite rising Tuesday, crude oil prices remain far below record high points of above 147 dollars per barrel reached in July.
Last week, the OPEC oil producers' cartel announced it would hold an extraordinary meeting in Vienna on November 18, as member countries fret over the effects of the global financial crisis on crude prices.
"Some OPEC members continue to reiterate their stance that OPEC will consider cutting output if demand for oil is indeed lower," added Norrish at Barclays Capital.
The Organization of Petroleum Exporting Countries' next regular meeting is scheduled for December 17 in Oran, Algeria.
Iran on Sunday predicted that OPEC would cut oil output at its November session. Libya also appealed last week for lower production should crude futures continue to trade at current levels.
- AFP /ls
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