Oil rose more than $1 to trade above $74 a barrel on Friday as data in the United States promised economic recovery and a potential revival in energy demand. Home sales data for July showed recovery in the U.S. housing market, while Federal Reserve Chairman Ben Bernanke said that the global economy appears to be on the mend. U.S. crude for October delivery was up $1.17 to $74.08 abarrel at 12:15 p.m. EDT (1615 GMT), after briefly touching $74.72, its highest of the year. London Brent crude for October was up 83 cents at $74.16.
Oil is on track for a 7.3 percent gain this week, and was last at this level on Oct. 21, 2008 when it closed at $75.22 a barrel on its way down from a record peak above $147. The dollar pared losses against the euro, helping to pressure oil off earlier highs as investors sought the safer haven of the dollar, away from commodities. â€œCrude was up a lot when the dollar was down and now the dollar has backed off its lows and so crude is off its highs,â€ said Tom Knight, a trader at Truman Arnold in
Texarkana, Texas.â€On balance, I see crude remaining on the upside if equities hold up their gains,â€ he added. Ben Bernanke told a Fed conference on Friday that the global economy was mending, though critical challenges remain and recovery is likely to be sluggish. U.S. equities rose on Friday, sending the S&P 500 index to a 10-month intraday high on economic optimism.
Another boon for optimism came from the U.S. National Association of Realtors, which said on Friday that sales of previously owned homes jumped 7.2 per cent in July, the fastest sales pace in nearly two years.U.S. highway travel was up 2 per cent in June compared with a year ago, rising 4.9 billion miles to 256.7 billion miles, the U.S. Transportation Department said on Friday. Tighter regulation of the energy market may take the edge off high prices, Commerzbank said in note on Thursday. â€œThe significant rise in the oil price in the first half of the year is due in large part to a recovery in investment by financial investors,â€ analyst Eugen Weinberg at Commerzbank wrote in their Commodities Spotlight Energy newsletter â€œIf their influence is reduced by the (Commodity Futures Trading Commissionâ€™s) actions and sanity prevails, the oil price will fall.â€ The CFTC is widely expected to introduce stricter positionlimits for non-physical investors in commodities before the end of 2009.