Oil price hits seven-month peak above 68 dollars

Crude oil prices soared on Monday, rising above 68 dollars a barrel for the first time for seven months, boosted by higher Chinese output, a weak US currency and rising equity markets, traders said.

New York’s main futures contract, light sweet crude for July delivery, struck 68.29 dollars — a level last reached on October 30.

Brent North Sea crude for delivery in July bounced as high as 67.69 dollars a barrel.

“Crude oil is higher this morning, especially after news that the manufacturing sector in China expanded for a third month,” said BetOnMarkets analyst Dave Evans.

“China, the world’s second-biggest energy consumer, has been showing signs of a recovery over the last two months. There is a very strong chance of oil prices testing the 70-dollar level.”

China’s manufacturing activity expanded in May for the third month running, official data showed on Monday, the latest tentative sign of economic recovery.

The official Purchasing Managers’ Index, or PMI, for the manufacturing sector pulled back slightly to 53.1 in May, down from 53.5 in April, the China Federation of Logistics and Purchasing said in a statement on its website.

A reading above 50 means the sector is expanding, while a reading below 50 indicates an overall decline.

Meanwhile, the euro jumped on Monday above 1.42 dollars for the first time this year, as rebounding global stock markets persuaded investors to switch away from the safe-haven US currency, dealers said.

A weak US currency makes dollar-priced oil cheaper for holders of stronger currencies and in turn, tends to stimulate demand and push prices higher.

In morning trading here, the European single currency hit 1.4246 dollars, which was the highest level since December 29, 2008.

World stock markets rose sharply Monday as investors awaited the imminent bankruptcy filing of General Motors, while energy and mining companies were also boosted by higher commodity prices.

(AFP & Zawya)


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